
 



 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
 
THE SECURITIES EXCHANGE ACT OF 1934
 
FOR THE FISCAL YEAR ENDED JANUARY 31, 2024
             COMMISSION FILE NO. 001-09097
 
REX AMERICAN
RESOURCES CORPORATION (Exact name of registrant as specified in its charter)
 
  Delaware
(State or other jurisdiction of
incorporation or organization)   31-1095548
(I.R.S. Employer Identification No.)         7720 Paragon Road, Dayton, Ohio
(Address of principal executive offices)    45459 (Zip Code)
 
 
 
Registrant’s telephone number, including
area code (937) 276-3931
 
 
 
Securities registered pursuant to Section 12(b)
of the Act:
 
  Title of each class Trading Symbol(s) Name of each exchange
on which registered  Common Stock, $.01 par value REX New York Stock Exchange 
 
Indicate by check mark if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☑
 
Indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑
 
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes ☑ No ☐
 
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during
the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
 
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.
See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”
and “emerging growth company” in Rule 12b-2 of the Exchange Act. (check one):
 
Large accelerated filer ☐
Accelerated filer ☑ Non-accelerated filer ☐
Smaller reporting company ☐ Emerging growth company ☐
 
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act ☐
 
Indicate by check mark whether the registrant
has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report. Yes ☑ No ☐

 


If securities are registered pursuant to Section
12(b) of the Act, indicated by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previous issued financial statements. Yes ☐ No ☑
 
Indicate by check mark whether any of those error
corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s
executive offices during the relevant recovery period pursuant to §240.10D-1(b). Yes ☐ No ☑
 
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No ☑
 
At the close of business on July 31, 2023, the
aggregate market value of the registrant’s outstanding Common Stock held by non-affiliates of the registrant (for purposes of this
calculation, 2,222,857 shares beneficially owned by directors and executive officers of the registrant were treated as being held by affiliates
of the registrant), was $565,698,474.
 
There were 17,503,745 shares of the registrant’s
Common Stock outstanding as of March 28, 2024.
 
Documents Incorporated by Reference
Portions of REX American Resources Corporation’s
definitive Proxy Statement for its Annual Meeting of Shareholders on June 11, 2024 are incorporated by reference into Part III of this
Form 10-K.
 

 2


Forward-Looking
Statements
 
This Form 10-K contains or may contain forward-looking
statements as defined in the Private Securities Litigation Reform Act of 1995. Such statements can be identified by use of forward-looking
terminology such as “may,” “expect,” “believe,” “estimate,” “anticipate” or
“continue” or the negative thereof or other variations thereon or comparable terminology. Readers are cautioned that there
are risks and uncertainties that could cause actual events or results to differ materially from those referred to in such forward-looking
statements. These risks and uncertainties include the risk factors set forth from time to time in the Company’s filings with the
Securities and Exchange Commission and include among other things: the effect of pandemics such as COVID-19 on the Company’s business
operations, including impacts on supplies, demand, personnel and other factors, the impact of legislative and regulatory changes, the
price volatility and availability of corn, distillers grains, ethanol, distillers corn oil, gasoline and natural gas, commodity market
risk, ethanol plants operating efficiently and according to forecasts and projections, logistical interruptions, success in permitting
and developing the planned carbon sequestration facility near the One Earth Energy ethanol plant, changes in the international, national
or regional economies, the impact of inflation, the ability to attract employees, weather, results of income tax audits, changes in income
tax laws or regulations, the impact of U.S. foreign trade policy, changes in foreign currency exchange rates and the effects of terrorism
or acts of war. The Company does not intend to update publicly any forward-looking statements except as required by law. Other factors
that could cause actual results to differ materially from those in the forward-looking statements are set forth in Item 1A.
 
Available
Information
 
REX makes available free of charge on its Internet
website its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports as
soon as reasonably practicable after such material is electronically filed with or furnished to the SEC. REX’s Internet website
address is www.rexamerican.com. The contents of the Company’s website are not a part of this report.
 
PART
I
 

Item 1.Business
 
References to “we”, “us”,
“our”, “REX” or “the Company” refer to REX American Resources Corporation and its majority owned subsidiaries.
 
Fiscal Year
 
All references in this report to a particular
fiscal year are to REX’s fiscal year ended January 31. We refer to our fiscal year by reference to the year immediately preceding
the January 31 fiscal year end date. For example, “fiscal year 2023” means the period February 1, 2023 to January 31, 2024.
 
Corporate History and Background
 
REX was incorporated in Delaware in 1984 as a
holding company. Our principal offices are located at 7720 Paragon Road, Dayton, Ohio 45459. Our telephone number is (937) 276-3931.
 
In 2006, we started investing in ethanol production
facilities. We are currently invested in three ethanol production entities – One Earth Energy, LLC (“One Earth”), NuGen
Energy, LLC (“NuGen”), and Big River Resources, LLC (“Big River”). We own a majority interest in One Earth and
NuGen. We also own a majority interest in an entity that owned and, until November 18, 2021, operated a refined coal facility. As we have

 3


ceased operating the refined coal facility, we
began classifying the financial results of the operating segment as discontinued operations. We now have one reportable segment, ethanol
and by-products.
 
General Overview
 
We reported net income attributable to REX common
shareholders of $60.9 million in fiscal 2023 compared to approximately $27.7 million in fiscal 2022. Our ethanol business had increased
profits in fiscal 2023 compared to fiscal 2022 as a result of higher crush spreads in fiscal 2023. The two largest drivers of ethanol
profitability are corn and ethanol pricing, both of which experienced significant volatility within the year. Chicago Board of Trade corn
prices per bushel ranged from a low of $4.40 in January 2024 to a high of $6.85 in February 2023. S&P Global Platts ethanol pricing
per gallon ranged from a low of $1.52 in January 2024 to a high of $2.67 in June 2023.
 
The form and structure of our ethanol investments
are tailored to the specific needs and goals of each project and the local farmer group or investor with whom we partner. We generally
participate in the oversight of our projects through our membership on the board of managers of the limited liability companies that own
the plants. We provide management oversight and direction with respect to most aspects of plant operations for our consolidated ethanol
companies. We have equity investments in three entities engaged in the production of ethanol as of January 31, 2024. The following table
is a summary of our ethanol entity ownership interests at January 31, 2024:
 



 
Entity

 
Location
REX's Current Ownership Interest

One Earth Energy, LLC
Gibson City, IL
75.8%

NuGen Energy, LLC
Marion, SD
99.7%


Big River Resources, LLC:
Big River Resources W Burlington, LLC
Big River Resources Galva, LLC
Big River United Energy, LLC
Big River Resources Boyceville, LLC

 
W. Burlington, IA
Galva, IL
Dyersville, IA
Boyceville, WI

 
10.3%
10.3%
5.7%
10.3%

 
 
The three entities own a total of six ethanol
production facilities, which in aggregate shipped approximately 716 million gallons of ethanol over the twelve-month period ended January
31, 2024. REX’s effective ownership of gallons shipped, for the twelve-month period ended January 31, 2024, by the ethanol production
facilities in which we have ownership interests was approximately 290 million gallons.
 
Our ethanol operations are highly dependent on
commodity prices, especially prices for corn, ethanol, distillers grains, distillers corn oil and natural gas, and availability of corn.
As a result of price volatility for these commodities, our operating results can fluctuate substantially. The price and availability of
corn is subject to significant fluctuations depending upon several factors that affect commodity prices in general, including crop conditions,
the amount of corn stored on farms, weather, federal policy, foreign trade, and international disruptions caused by wars or conflicts.
Because the market prices of ethanol and distillers grains are not always directly related to corn prices (for
example, demand for crude and other energy and related prices, the export market demand for ethanol and distillers grains, soybean meal
prices, and the results of federal policy decisions and trade negotiations can impact ethanol and distillers grains prices), at
times ethanol and distillers grains prices may not follow movements in corn prices and, in an environment of higher corn prices or lower
ethanol or distillers grains prices, reduce the overall margin structure at the plants. As a result, at times, we may operate our plants
at negative or minimally positive operating margins.

 4


We expect our ethanol plants to produce approximately
2.9 gallons of denatured ethanol for each bushel of corn processed in the production cycle. We refer to the actual gallons of denatured
ethanol produced per bushel of corn processed as the realized yield. We refer to the difference between the price per gallon of ethanol
and the price per bushel of corn (divided by the realized yield) as the “crush spread.” Should the crush spread decline, it
is possible that our ethanol plants will generate operating results that do not provide adequate cash flows for sustained periods of time.
In such cases, production at the ethanol plants may be reduced or stopped altogether in order to minimize variable costs at individual
plants.
 
We attempt to manage the risk related to the volatility
of commodity prices by utilizing forward corn and natural gas purchase contracts, forward ethanol, distillers grains and distillers corn
oil sale contracts, and commodity futures agreements, as management deems appropriate. We attempt to match quantities of these sales contracts
with an appropriate quantity of corn purchase contracts over a given period of time when we can obtain an adequate gross margin resulting
from the crush spread inherent in the contracts we have executed. However, the market for future ethanol sales contracts generally lags
the spot market with respect to ethanol prices. Consequently, we generally execute fixed price ethanol contracts for no more than four
months into the future at any given time and we may lock in our corn or ethanol price without having a corresponding locked in ethanol
or corn price for short durations of time. As a result of the relatively short period of time our fixed price contracts cover, we generally
cannot predict the future movements in our realized crush spread for more than four months; thus, we are unable to predict the likelihood
or amounts of future income or loss from the operations of our ethanol facilities.
 
On August 10, 2017, we purchased, through a 95.35%
owned subsidiary, for approximately $12.0 million, the entire ownership interest of an entity that owned a refined coal facility. We began
operating the refined coal facility immediately after the acquisition. As the plant was no longer eligible to receive federal production
tax credits beginning on November 18, 2021, we ceased operations on that date and subsequently sold the facility. We began classifying
this operation as discontinued operations in the third quarter of fiscal 2021.
 
One
Earth Sequestration, LLC, a wholly owned subsidiary of One Earth Energy, LLC, is in the developmental stage of a carbon
sequestration project near the One Earth Energy ethanol plant. A test well has been drilled to a total depth of approximately 7,100
feet, in which almost 2,000 feet of Mt. Simon Sandstone was encountered, which is the geological formation that is the
region’s primary carbon storage resource. Three-dimensional seismic testing has been performed, as well as geological modeling
for predicting the movement of injected carbon and the plume area to determine maximum injection pressure, reservoir quality and
storage capacity for the potential wells. In October 2022, we applied for a Class VI injection well permit for three wells with the
U.S. Environmental Protection Agency (“EPA”). In addition, we have begun construction of a facility to capture,
dehydrate, and compress carbon dioxide from the One Earth Energy ethanol plant to a state suitable for sequestration. We expect to
complete construction by July 31, 2024, at which time testing of the facility could commence, upon completion of other
infrastructure. In October 2023, we submitted an application with the Illinois Commerce Commission to build a short pipeline to
deliver carbon dioxide from the ethanol plant to the sequestration site. We continue to pursue obtaining a county special-use zoning
permit. Although we have made meaningful progress and significant investments in this project, we continue to complete required
documentation for various government agencies and obtain permits and other approvals with no assurances of ultimate success.
 
We also intend to concurrently expand the One
Earth ethanol plant. We recently received a permit to increase production from 150 million gallons of ethanol per year to 175 million
gallons of ethanol per year. Once we achieve that level of production, planned for the first quarter of 2025, we intend to apply for a
200 million gallon per year permit from the EPA. Finally, we continue to work to identify ways to reduce our carbon intensity (“CI”)
score at the One Earth plant with the intention of maximizing tax credits available under the Inflation Reduction Act. The Inflation Reduction
Act created a new Clean Fuel Production Credit, available for calendar years 2025 – 2027, which established a credit of approximately
$0.02 per ethanol gallon per CI

 5


point reduction below a 50 CI score threshold
to incentivize further increases in plant efficiencies within the industry.
 
We expect the total cost of these projects
to be approximately $165 million to $175 million, which we currently plan to pay from our available
cash. As of January 31, 2024, we had spent $25.8 million since inception and were contractually committed to spend an additional
$22.6 million toward the carbon sequestration project. If the carbon sequestration project is successful, we believe we would
qualify for tax credits under section 45Q of the Internal Revenue Code (“45Q”), based on tons of carbon sequestered, and
section 45Z of the Internal Revenue Code (“45Z”), based on gallons
of ethanol produced, as outlined in the Inflation Reduction Act. As of January 31, 2024, we
had spent $12.8 million since inception and were contractually committed to spend an additional $12.3 million toward plant capacity
expansion and ongoing efforts to reduce our CI scoring.
 
NuGen Energy, LLC, our majority owned ethanol plant in Marion, South Dakota,
signed an agreement to be part of Summit Carbon Solutions’ carbon capture and storage pipeline. Should Summit Carbon Solutions be
able to obtain all necessary permits and approvals, the agreement would allow NuGen to share in the economic benefits of tax credits through
the sale of the carbon dioxide output of its ethanol production facility for sequestration, as well as reduce its net carbon emissions.
 
We plan to seek and evaluate various investment
opportunities including energy related, carbon sequestration, agricultural and other ventures we believe fit our investment criteria.
We can make no assurances that we will be successful in our efforts to find such opportunities.
 
Ethanol Industry
 
Ethanol is a renewable fuel produced by processing
corn and other biomass through a fermentation process that creates combustible alcohol that can be used as a fuel additive to reduce vehicle
emissions from gasoline, as an octane enhancer to improve the octane rating of gasoline with which it is blended and, to a lesser extent,
as a gasoline substitute. The majority of ethanol produced in the United States is made from corn because of its wide availability and
ease of convertibility from large amounts of carbohydrates into glucose, the key ingredient in the fermentation process that is used in
producing alcohol. Ethanol production can also use feedstocks such as grain sorghum, switchgrass, wheat, barley, potatoes and sugarcane
as carbohydrate sources. Most ethanol plants have been located near large corn production areas, such as Illinois, Indiana, Iowa, Minnesota,
Nebraska, Ohio and South Dakota. Railway access and interstate access are vital for ethanol facilities due to the large amount of raw
materials and finished goods required to be shipped to and from the facilities. An adequate supply of natural gas is key to maintaining
optimal operating levels.
 
According to the Renewable Fuels Association (“RFA”),
the United States ethanol industry produced an estimated 15.6 billion gallons of ethanol in 2023, compared to 15.4 billion gallons in
2022. Approximately 1.4 billion gallons were estimated to have been exported from the United States in 2023. According to the RFA, the
United States ethanol industry consists of 198 plants in 24 states with an annual capacity of approximately 18.0 billion gallons of ethanol
production.
 
Domestic demand for ethanol is highly dependent
upon federal and state legislation and regulations. On December 19, 2007, the Energy Independence and Security Act of 2007 (the “Energy
Act of 2007”) was enacted. The Energy Act of 2007 established new levels of renewable fuel mandates, including two different categories
of renewable fuels: conventional biofuels and advanced biofuels. The federal government mandates the use of renewable fuels under Renewable
Fuel Standard II (“RFS II”), established in October 2010. Corn-based ethanol is considered a conventional biofuel. There were
mandated volumes established as part of the RFS II for conventional and advanced biofuels through the year 2022. After 2022, RFS volumes
are to be determined by the EPA in coordination with the Secretaries of Energy and Agriculture. The mandated volumes for conventional
biofuel were to reach 15.0 billion gallons in 2015 and maintain that level until 2022.
 
The EPA has set conventional renewable fuel volumes
of 15.0 billion gallons for 2023 through 2025. Additionally, in 2023, the EPA restored 250 million gallons previously waived.
 
Under RFS II, a small refiner that processes less
than 75,000 barrels of oil per day can petition the EPA for a waiver of their requirement to acquire and submit renewable identification
numbers (“RINs”). The EPA,

 6


through consultation with the Department of Energy
and the Department of Agriculture, can grant the refiner a full or partial waiver, or deny the waiver. The EPA issued 88 refinery exemptions
for 2016-2018 compliance years, undercutting the statutory renewable fuel volumes by a total of 4.3 billion gallons. The EPA has not granted
any small refinery waivers for 2019-2022 and has continued that stance in the proposed volumes for 2023-2025. There remain multiple ongoing
legal challenges to how the EPA has handled the small refinery waivers, including on November 22, 2023, a ruling by the Fifth U.S. Circuit
Court of Appeals (the “Court”) against the EPA on six SREs the EPA had previously denied. The Court remanded those six petitions
back to the EPA and each refinery will continue to operate under temporary SREs granted to them by the Court.
 
Ethanol Production
 
The plants in
which we have invested are designed to use the dry milling method of producing ethanol. In the dry milling process, the entire corn kernel
is first ground into flour, which is referred to as “meal,” and processed without separating out the various component parts
of the grain. The meal is processed with enzymes, chemicals and water, and then placed in a high-temperature cooker. It is then transferred
to fermenters where yeast is added and the conversion of sugar to ethanol begins. After fermentation, the resulting liquid is transferred
to distillation columns where the ethanol is separated from the remaining “stillage” for fuel uses. The anhydrous ethanol
is then blended with a denaturant, such as natural gasoline, to render it undrinkable and thus not subject to beverage alcohol tax. With
the starch elements of the corn consumed in the above-described process, the principal by-product produced by the dry milling process
is dry distillers grains with solubles, or DDGS. DDGS is sold as a protein used in animal feed, which recovers a portion of the corn value
not absorbed in ethanol production. Depending on market and operating conditions, we may also sell modified distillers grains, or wet
distillers grains, by removing less liquid content compared to DDGS. We also generate revenues from the sale of distillers corn oil produced
at our facilities. Distillers corn oil is sold to the animal feed market, as well as biodiesel and other chemical markets.
 
The Primary Uses of Ethanol
 
Blend component. Today,
much of the ethanol blending in the U.S. is done to meet the RFS. Most regular gasoline is produced using blendstock with an octane rating
of 84, which is then increased to 87 (the minimum octane rating required in most states) by adding 10% ethanol according to the RFA. The
industry is attempting to expand ethanol blending above the current 10% for most vehicles in use. The EPA has approved the use of 15%
ethanol (“E-15”), which has an octane rating of 88, in gasoline for cars, SUV’s and light duty trucks made in 2001 and
later. Previously, the EPA had not granted E-15 the same Reid vapor pressure (“RVP”) waiver as E-10 so it could only be sold
from September 16 through May 31 for those vehicles in most markets. The EPA issued emergency waivers to allow the sale of E-15 for the
summer months in both 2022 and 2023. Eight Midwest states (Illinois, Iowa, Minnesota, Missouri, Nebraska, Ohio, South Dakota, and Wisconsin)
petitioned the EPA to allow year-round sales of E-15 in their states. The EPA has approved this request beginning in 2025.
 
Clean air additive. Ethanol
is employed by the refining industry as a fuel oxygenate, which when blended with gasoline, allows engines to combust fuel more completely
than gasoline that has not been oxygenated and thus reduce emissions from motor vehicles. Ethanol contains 35% oxygen, which results in
more complete combustion of the fuel in the engine cylinder. Oxygenated gasoline is used to help meet certain federal and air emission
standards.
 
Octane enhancer. Ethanol
increases the octane rating of gasoline with which it is blended. Octane is a measure of fuel performance. Ethanol is used by gasoline
suppliers as an octane enhancer both for producing regular grade gasoline from lower octane blending stocks and for upgrading regular
gasoline to premium grades.

 7


Legislation
 
The United States ethanol industry is highly dependent
upon federal and state legislation. See Item 1A. Risk Factors for a discussion of legislation affecting the U.S. ethanol industry.
 
Refined Coal Facility
 
On August 10, 2017, we purchased, through a 95.35%
owned subsidiary, the entire ownership interest of an entity that owned a refined coal facility. We began operating the refined coal facility
immediately after the acquisition. Using licensed technology, our plant applied two separate chemicals to convert feedstock coal into
refined coal, which was sold to the end user of the refined coal. The refined coal operating results were subsidized by federal production
tax credits through November 18, 2021, subject to meeting qualified emissions reductions as governed by Section 45 of the IRC. We ceased
operating the facility on November 18, 2021 and subsequently sold the facility. We began to report these results as discontinued operations
in the third quarter of 2021.
 
Section 45 of the IRC was created by Congress
to encourage the development and use of environmentally sound solutions to control harmful emissions during energy production and to facilitate
and move the United States towards better compliance with global environmental energy standards. The American Jobs Creation Act of 2004
amended Section 45 of the IRC by adding provisions to incentivize the production of emission reducing refined coal. To qualify for tax
credits under Section 45 of the IRC, a process must reduce coal emissions of nitrogen oxide by 20% and either sulfur dioxide or mercury
by 40%.
 
The federal production tax credits received through
ownership of this facility remain under IRS audit.
 
Facilities
 
As of our fiscal year end, our consolidated ethanol
entities owned a combined 1,477 acres of land and two facilities that shipped a combined quantity of approximately 286 million gallons
of ethanol in fiscal year 2023. We also own our corporate headquarters office building, consisting of approximately 7,500 square feet,
located in Dayton, Ohio.
 
Human Capital Resources
 
The
attraction, retention and development of employees is critical to our success. We accomplish these objectives through a variety of actions,
including our competitive compensation policies, discretionary stock award programs, training initiatives, and growth opportunities within
our Company. At January 31, 2024, we had 117 employees at our two consolidated ethanol plants and at our corporate headquarters. None
of our employees are represented by a labor union. We expect this employment level to remain relatively stable. We consider our relationship
with our employees to be good.
 
We conduct regularly scheduled
safety meetings and require all employees to go through safety training. We evaluate employee safety incidents monthly and investigate
such incidents promptly. In addition, we conduct periodic safety audits performed by an independent third party. A portion of our incentive
compensation plan rewards employees for attaining certain safety goals.
 
We believe we offer market competitive
compensation and benefit programs for our employees. In addition to competitive base wages, all employees are eligible for an incentive
compensation program, a Company matched 401(k) plan, healthcare benefits, and paid time off.

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Service Marks
 
We have registered the service marks “REX”
and “Farmer’s Energy” with the United States Patent and Trademark Office. We are not aware of any adverse claims concerning
our service marks.
 

Item 1A.Risk Factors
 
We encourage you to carefully consider the risks
described below and other information contained in this report when considering an investment decision in REX common stock. Any of the
events discussed in the risk factors below may occur. If one or more of these events do occur, our results of operations, financial condition
or cash flows could be materially adversely affected. In this instance, the trading price of REX stock could decline, and investors might
lose all or part of their investment.
 
Risks Related to our Ethanol and By-Products
Business
 
The ethanol industry is changing rapidly which
could result in unexpected developments that could negatively impact our operations.
 
According to the RFA, the ethanol industry grew
from approximately 1.5 billion gallons of domestic annual ethanol production in 1999 to a peak of approximately 16.1 billion gallons in
2018. In 2023 and 2022, the industry produced approximately 15.6 and 15.4 billion gallons, respectively, with the reduction from the peak
year reflecting industry conditions and reduced demand. Thus, there have been significant changes in the supply and demand of ethanol
over a relatively short period of time which could lead to difficulty in maintaining profitable operations at our ethanol plants.
 
The financial returns on our ethanol investments
are highly dependent on commodity prices, which are subject to significant volatility, uncertainty and regional supply shortages, so our
results could fluctuate substantially.
 
The financial returns on our
ethanol investments are highly dependent on commodity prices, especially prices for corn, natural gas, ethanol, distillers grains, distillers
corn oil and gasoline, and availability of corn. As a result of the volatility of the prices for these items, our returns may fluctuate
substantially and our investments could experience periods of declining prices for their products and increasing costs for their raw materials,
which could result in operating losses at our ethanol plants.
 
The gross margin at our ethanol
plants depends principally on the spread between ethanol, distillers grains, distillers corn oil, and corn prices. Fluctuations in the
spread are likely to continue to occur. A sustained narrow or negative spread, whether as a result of sustained high or increased corn
prices or sustained low or decreased ethanol prices, would adversely affect the results of operations at our ethanol plants.
 
Our returns on ethanol
investments are highly sensitive to corn prices.
 
Corn is the principal raw material
our ethanol plants use to produce ethanol and by-products. As a result, changes in the price of corn can significantly affect our businesses.
Rising corn prices result in higher production costs of ethanol and by-products. Because ethanol competes with non-corn-based fuels, our
ethanol plants may not be able to pass along increased grain costs to our customers. At certain levels, grain prices may make ethanol
uneconomical to produce.
 
The price of corn is influenced
by weather conditions and other factors affecting crop yields, transportation costs, farmer planting decisions, exports, foreign production,
the value of the U.S. dollar, and general domestic

 9


and foreign economic, market
and regulatory factors, including, but not limited to, the impacts from the Russian-Ukraine conflict as well as other conflicts and political
unrest, both foreign and domestic. These factors include government policies and subsidies with respect to agriculture and international
trade and global and local demand and supply. The significance and relative effect of these factors on the price of corn is difficult
to predict. Any event that tends to negatively affect the production and/or supply of corn, such as adverse weather or crop disease, could
increase corn prices and potentially harm the business of our ethanol plants, to include intermittent production slowdowns or stoppages.
Increasing domestic ethanol production could boost the demand for corn and result in increased corn prices. International demand for corn
could also result in higher corn prices. Our ethanol plants may also have difficulty, from time to time, in physically sourcing corn on
economic terms due to regional supply shortages, transportation issues, delays in farmer marketing decisions or unfavorable local pricing.
The corn harvest near our NuGen facility for 2022 was negatively impacted by dry weather and impacted the supply of corn until the 2023
harvest. Such a shortage or price impact could require our ethanol plants to suspend operations which would have a material adverse effect
on our consolidated results of operations.
 
Our risk management strategies
may be ineffective and may expose us to decreased profitability and liquidity.
 
In an attempt to partially offset
the impact of volatility of commodity prices, we enter into: i) forward contracts to sell a portion of our ethanol, distillers grains,
and distillers corn oil production and to purchase a portion of our corn and natural gas requirements and; ii) commodity futures and swap
agreements. The financial impact of these risk management activities is dependent upon, among other items, the prices involved and our
ability to receive or deliver the commodities involved. Risk management activities can result in financial loss when positions are purchased
in a declining market or when positions are sold in an increasing market. In addition, we may not be able to match the appropriate quantity
of corn contracts with quantities of ethanol, distillers grains and distillers corn oil contracts. Further, our
results may be impacted by a mismatch of gains or losses associated with the positions during a reporting period when the physical commodity
purchase or sale has not yet occurred. We vary the amount and type of risk management techniques we utilize, and we may choose
not to engage in any risk management activities. Should we fail to properly manage the inherent volatility of commodity prices, our results
of operations and financial condition may be adversely affected.
 
The market for natural
gas is subject to market conditions that create uncertainty in the price and availability of the natural gas that our ethanol plants use
in their manufacturing process.
 
Our ethanol plants rely upon
third parties for their supply of natural gas, which is consumed as fuel in the production process. The prices for and availability of
natural gas are subject to volatile market conditions. These market conditions often are affected by factors beyond the ethanol plants’
control, such as weather conditions, overall economic conditions, export market, governmental regulation and foreign and domestic relations,
including, but not limited to, the impacts from the Russian-Ukraine conflict. Significant disruptions in the supply of natural gas could
impair or completely prevent the ethanol plants’ ability to economically manufacture ethanol for their customers. Furthermore, increases
in natural gas prices may adversely affect results of operations and financial position at our ethanol plants.
 
Fluctuations in the selling price of commodities
may reduce profit margins at our ethanol plants.
 
Ethanol is marketed as a fuel additive to reduce
vehicle emissions from gasoline, as an octane enhancer to improve the octane rating of gasoline with which it is blended and, to a lesser
extent, as a gasoline substitute. As a result, ethanol prices are influenced by the supply and demand for gasoline, and our ethanol plants’
results of operations and financial position may be materially adversely affected if gasoline demand decreases or the price of gasoline
declines making ethanol less economical.

 10


Distillers grains compete with other protein-based
animal feed products. The price of distillers grains may decrease when the prices of competing feed products decrease. The prices of competing
animal feed products are based in part on the prices of the commodities from which these products are made. Historically, sales prices
for distillers grains have tracked along with the price of corn. However, there have been instances when the price increase for distillers
grains has lagged increases in corn prices.
 
The production of distillers grains has increased
as a result of increases in dry mill ethanol production in the United States. This could lead to price declines in what we can sell our
distillers grains for in the future. Such declines could have a material adverse effect on our results of operations.
 
Pricing of distillers corn oil is primarily driven
by the demand from renewable diesel, biodiesel, and to some extent, sustainable aviation fuel markets. Distillers corn oil is marketed
as a low-carbon feedstock to be used in these markets which may see expanded demand due to the extended blending tax credit, credits included
in the Inflation Reduction Act and growing Low Carbon Fuel Standard (“LCFS”) markets, resulting in an impact to distillers
corn oil demand. With a lower CI score, distillers corn oil may see improved pricing compared to heating oil and soybean oil, which it
has traditionally tracked closely in price. Alternatively, other feedstocks such as cooking oil and animal fats, with lower CI scoring,
could be preferred over distillers corn oil. A decrease in the price of or demand for distillers corn oil could negatively impact our
results of operations.
 
Inflation could impact the
cost and/or availability of material, labor and other input, which could adversely affect our operations.
 
We have experienced inflationary impacts on key
production inputs, labor costs consisting of both wages and other labor-related costs, services, equipment and other inputs. These inflationary
pressures could continue or worsen in future periods and may be beyond our control. We may not be able to pass these increased costs along
to our customers through the products we sell. As a result, inflation and higher prices could negatively impact our results of operations.
 
Increased ethanol production
or decreases in demand for ethanol may result in excess production capacity in the ethanol industry, which may cause the price of ethanol,
distillers grains and distillers corn oil to decrease.
 
According to the RFA, domestic
ethanol production capacity is approximately 18.0 billion gallons per year. Under RFS II, there were mandated volumes through 2022 for
conventional and advanced biofuels. After 2022, RFS volumes are to be determined by the EPA in coordination with the Secretaries of Energy
and Agriculture. The EPA has set conventional renewable fuel volumes of 15.0 billion gallons for 2023 through 2025. In addition, for 2023
they restored 250 million gallons previously waived. The implied excess capacity over the EPA proposed volumes could have an adverse effect
on the results of our operations. In a manufacturing industry with excess capacity, producers have an incentive to manufacture additional
products for so long as the price exceeds the marginal cost of production (i.e., the cost of producing only the next unit, without regard
for interest, overhead or fixed costs). This incentive could result in the reduction of the market price of ethanol to a level that is
inadequate to generate sufficient cash flow to cover costs.
 
A decrease in demand for ethanol
may result in excess capacity, which could result from a number of factors, including, but not limited to, regulatory developments and
reduced U.S. gasoline consumption. Reduced gasoline consumption could occur as a result of increased prices for gasoline or crude oil,
which could cause businesses and consumers to reduce driving or acquire vehicles with more favorable gasoline mileage or acquire non-gasoline
powered vehicles. In addition, decreased overall economic activity could also lead to reduced gasoline consumption.

 11


In addition, because ethanol
production produces distillers grains and distillers corn oil as by-products, increased ethanol production will also lead to increased
supplies of distillers grains and distillers corn oil. An increase in the supply of distillers grains and distillers corn oil, without
corresponding increases in demand, could lead to lower prices or an inability to sell our ethanol plants’ distillers grains and
distillers corn oil production. A decline in the price of distillers grains or distillers corn oil could have a material adverse effect
on the results of our business, financial condition, and results of operations.
 
The price of ethanol and distillers grains
may decline as a result of trade restrictions or duties on ethanol and distillers grains exports from the United States or from unfavorable
foreign currency exchange rates.
 
If the United States were to withdraw from or
materially modify certain international trade agreements, our business, financial condition and results of operations could be materially
adversely affected. Ethanol and other products that we produce are sold into various other countries with trade agreements with the United
States. If tariffs were raised on the foreign-sourced goods that lead to retaliatory actions, it could have material adverse effect on
our business, financial condition and results of operations.
 
The United States exported an estimated 1.4 billion
gallons of ethanol in 2023, up from approximately 1.3 and approximately 1.2 billion gallons in 2022 and 2021, respectively. In 2023 and
2022, an estimated 10.8 and 11.4 million metric tons, respectively, of distillers grains were exported, which represented approximately
34% of U.S production each year. If producers and exporters of ethanol and distillers grains are subject to trade restrictions, or additional
duties are imposed on exports, it may make it uneconomical to export these products. The industry has experienced various trade policy
disputes, tariffs and investigations in foreign countries that have adversely impacted the international demand for our products. Reduced
international demand could lead to further oversupply and reduce pricing.
 
Future demand for ethanol is uncertain and
changes in overall consumer demand for transportation fuel could affect demand.
 
There are limited markets for ethanol other than
what is federally mandated. Increased consumer acceptance of E15 and E85 fuel is likely necessary in order for ethanol to achieve significant
market share growth beyond federal mandate levels.
 
Consumer demand for gasoline may be impacted by
emerging transportation trends, such as hybrid and electric vehicles. Numerous automobile manufacturers have announced plans to phase
out internal combustion engine production by the mid-2030s. There also have been pledges to ban the sale of internal combustion engines
in countries such as Japan and the United Kingdom by 2035, as well as a statewide ban in California, which several states are imitating.
If realized, these bans would accelerate the decline of liquid fuel demand and by extension demand for ethanol, biodiesel and renewable
diesel. Recent federal legislation seeks to address the ever-increasing demand for electric vehicle infrastructure. Reduced demand for
ethanol could cause our results of operations to be materially impacted.
 
We depend on our partners to operate certain
of our ethanol investments.
 
Our investments currently represent both majority
and minority equity positions. Day-to-day operating control of minority owned plants generally remains with the local investor group.
We do not have the ability to directly modify the operations of these plants in response to changes in the business environment or in
response to any deficiencies in local operations of the plants. In addition, local plant operators, who also represent the primary suppliers
of corn and other crops to the plants, may have interests, such as the price and sourcing of corn and other crops, that may differ from
our interest, which is based solely on the operating profit of the plant. The

 12


limitations on our ability to control day-to-day
plant operations could adversely affect plant results of operations.
 
We may not successfully acquire or develop
additional ethanol investments.
 
The growth of our ethanol business
depends on our ability to identify and develop new ethanol investments. Any expansion strategy will depend on prevailing market conditions
for the price of ethanol and the cost of corn and natural gas and the expectations of future market conditions. Additional financing may
also be necessary to implement any expansion strategy, which may not be accessible or available on acceptable terms. In addition, failure
to adequately manage the risks associated with additional ethanol investments could have a material adverse effect on our business.
 
We may not successfully develop our planned
carbon sequestration facility near the One Earth Energy ethanol plant.
 
The Company has committed significant time and
resources towards a carbon sequestration project near the One Earth Energy ethanol plant. The completion and start-up of this project
requires numerous government and landowner approvals. If we are not successful in obtaining all these approvals, we may not be able to
complete this project and could result in a significant write off of our commitments and investments.
 
If we are not successful on this project, our
ethanol plant could be at a disadvantage in the industry as our inability to sequester our carbon could result in a higher CI score than
our competitors if they are able to sequester their carbon. If we are unable to reduce our CI score, we may not be able to participate
in the state and federal clean fuel programs, including federal tax credits outlined in the Inflation Reduction Act.
 
Carbon capture and sequestration projects are
subject to federal, state, and local regulations.
 
In addition to our planned carbon sequestration
facility near our One Earth Energy ethanol plant, we have signed an agreement to deliver our carbon from the NuGen Energy facility to
an outside party. These projects may not result in any realized benefit due to delays or suspended operations. Investments being made
in these projects are based on regulatory guidelines, such as modeling for CI reductions, that may be adjusted outside of our control
and could deviate from our current strategy. Federal guidelines within the IRA could be changed to no longer include corn-based ethanol
from being eligible for certain tax incentives. Delays in the issuance or regulations or the elimination of clean fuel and other incentives
at the federal, state or local level could adversely affect our business. New legislation limiting our ability to sequester
carbon could be adopted at the federal, state or local levels.
 
Our ethanol plants may be adversely affected
by technological advances and efforts to anticipate and employ such technological advances may prove unsuccessful.
 
The development and implementation of new technologies
may result in a significant reduction in the costs of ethanol production. For instance, any technological advances in the efficiency or
cost to produce ethanol from inexpensive cellulosic sources such as corn stalk, wheat, oat or barley straw could have an adverse effect
on our ethanol plants, because our plants are designed to produce ethanol from corn, which is, by comparison, a raw material with other
high value uses. We cannot predict when, or if, new technologies may become available, the rate of acceptance of new technologies by competitors
or the costs associated with new technologies. In addition, advances in the development of alternatives to ethanol could significantly
reduce demand for or eliminate the need for ethanol.

 13


Any advances in technology which require significant
unanticipated capital expenditures to remain competitive or which reduce demand or prices for ethanol would have a material adverse effect
on the results of our ethanol operations.
 
In addition, alternative fuels, additives and
oxygenates are continually under development. Alternative fuel additives that can replace ethanol may be developed, which may decrease
the demand for ethanol. It is also possible that technological advances in engine and exhaust system design and performance could reduce
the use of oxygenates, which would lower the demand for ethanol. Reduced demand for ethanol could cause our results of operations to be
materially adversely affected.
 
The U.S. ethanol industry is highly dependent
upon a myriad of federal and state legislation and regulation and any changes in legislation or regulation could materially and adversely
affect our results of operations and financial position.
 
The renewable fuel standard program was authorized
under the Energy Policy Act of 2005 and was expanded under the Energy Independence and Security Act of 2007 (EISA). EISA increased the
amount of renewable fuel required to be blended into gasoline with RFS II and required a minimum usage of corn-derived renewable fuels
of 12.0 billion gallons in 2010, increasing annually by 600 million gallons to 15.0 billion gallons in 2015 through 2022, with no specified
volume subsequent to 2022. After 2022, RFS volumes are to be determined by the EPA in coordination with the Secretaries of Energy and
Agriculture. The EPA has the authority to assign the mandated amounts of renewable fuels to be blended into transportation fuel to individual
fuel blenders. RFS II has been a primary factor in the growth of ethanol usage. Over the past several years various pieces of legislation
have been introduced to the U.S. Congress that were intended to reduce or eliminate ethanol blending requirements. To date, none of the
bills have been successful but they are an indication of the continued effort to undermine the EISA.
 
The EPA has set conventional renewable fuel volumes
of 15.0 billion gallons for 2023 through 2025 Additionally, for 2023, the EPA restored 250 million gallons previously waived.
 
Obligated parties use RINs to show compliance
with RFS-mandated volumes. RINs are attached to renewable fuels by producers and detached when the renewable fuel is blended with transportation
fuel or traded in the open market. The market price of detached RINs affects the price of ethanol in certain markets and influences the
purchasing decisions by obligated parties. As a result of fluctuations in RINs pricing, certain obligated parties have petitioned the
EPA and filed court actions to change the point of obligation or to seek relief from their obligation. The EPA granted 88 total Small
Refinery Exemptions (“SREs”) for 2016 through 2018 totaling approximately 4.3 billion gallons. In recent years, the EPA had
largely denied small refiner waivers. However, on November 22, 2023, the Fifth U.S. Circuit Court of Appeals (the “Court”)
ruled against the EPA on six SREs the EPA had previously denied. The Court remanded those six petitions back to the EPA and each refinery
will continue to operate under temporary SREs granted to them by the Court. These and further SREs could lead to decreased RIN values
and ethanol pricing.
 
Flexible fuel vehicles (“FFVs”) receive
preferential treatment in meeting federally mandated corporate average fuel economy (“CAFE”) standards for automobiles manufactured
by car makers. High blend ethanol fuels such as E-85 result in lower fuel efficiencies. Absent the CAFE preferences, car makers would
not likely build flexible-fuel vehicles. In recent years, automobile manufactures have lowered the production of FFVs for the U.S. Any
change in CAFE preferences could reduce the growth of E-85 markets and result in lower ethanol prices.
 
Unfavorable changes in legislation or regulations
could materially and adversely affect our results of operations and financial position.

 14


The inability to generate or obtain RINs could
adversely affect our operating results.
 
Virtually all our ethanol is sold with RINs that
are used by customers to comply with RFS II. If our production does not meet EPA requirements for RIN generation, as an efficient producer,
in the future, we would have to purchase RINs in the open market or sell our ethanol at substantially lower prices, such as on the export
market, to adjust for the absence of RINs. The price of RINs varies based on many factors and cannot be predicted. Failure to obtain sufficient
RINs or reliance on invalid RINs could subject us to fines and penalties imposed by the EPA.
 
Various studies have criticized the efficiency
of ethanol, in general, and corn-based ethanol in particular, which could lead to the reduction or repeal of incentives and tariffs that
promote the use and domestic production of ethanol or otherwise negatively impact public perception and acceptance of ethanol as an alternative
fuel.
 
Although many trade groups, academics and governmental
agencies have supported ethanol as a fuel additive that promotes a cleaner environment, others have criticized ethanol production as consuming
considerably more energy and emitting more greenhouse gases than other biofuels and as potentially depleting water resources. Other studies
have suggested that corn-based ethanol negatively impacts consumers by causing prices to increase for dairy, meat and other foodstuffs.
 
If these views gain acceptance, support for existing
measures promoting use and domestic production of corn-based ethanol could decline, leading to reduction or repeal of these measures.
These views could also negatively impact public perception of the ethanol industry and acceptance of ethanol as an alternative fuel.
 
Federal support of cellulosic ethanol may result
in reduced incentives to corn-derived ethanol producers.
 
The American Recovery and Reinvestment Act of
2009 and EISA provide funding opportunities in support of cellulosic ethanol obtained from biomass sources such as switchgrass and poplar
trees. These federal policies may suggest a long-term political preference for cellulosic processes using alternative feedstocks such
as switchgrass, silage or wood chips. Cellulosic ethanol has a smaller carbon footprint than corn-derived ethanol and is unlikely to divert
foodstuff from the market. Our plants are designed as single-feedstock facilities, located in corn production areas with limited alternative
feedstock nearby, and would require significant additional investment to convert to the production of cellulosic ethanol. The adoption
of cellulosic ethanol as the preferred form of ethanol could have a significant adverse effect on our ethanol business.
 
Our ethanol business is affected by environmental and other regulations
which could impede or prohibit our ability to successfully operate our plants.
 
Our ethanol production facilities are subject
to extensive air, water discharge, and other environmental regulations. We have had to obtain numerous permits to construct and operate
our plants. Regulatory agencies could impose conditions or other restrictions in the permits that are detrimental, or which increase our
costs. More stringent federal or state environmental regulations could be adopted which could significantly increase our operating costs
or require us to expend considerable resources.
 
Our ethanol plants emit various airborne pollutants
as by-products of the ethanol production process, including carbon dioxide (a greenhouse gas). In 2007, the U.S. Supreme Court classified
carbon dioxide as an air pollutant under the Clean Air Act in a case seeking to require the EPA to regulate carbon dioxide in vehicle
emissions. In February 2010, the EPA released its final regulations on the Renewable Fuel Standard program. We believe our plants are
grandfathered up to certain operating capacity, but plant expansion requires us to

 15


meet a 20% threshold reduction in greenhouse gas
(GHG) emissions from a 2005 baseline measurement to produce ethanol eligible for the RFS II mandate. To further expand our plant capacity,
we may be required to obtain additional permits, install advanced technology equipment, or reduce drying of certain amounts of distillers
grains. We may also be required to install carbon dioxide mitigation equipment or take other steps in order to comply with future laws
or regulations. Compliance with future laws or regulations with respect to emissions of carbon dioxide, or if we choose to expand capacity
at certain of our plants, compliance with then-current regulations of carbon dioxide, could be costly and may prevent us from operating
our plants at full capacity or as profitably, which may have a negative impact on our financial performance. We also face the risk of
ethanol production above our grandfathered capacity not qualifying for RINs if the plants do not meet certain emission requirements.
 
The California Air Resources Board (“CARB”)
adopted a LCFS requiring a 10% reduction in GHG emissions from transportation fuels. An Indirect Land Use Charge is included in this lifecycle
GHG emission calculation. This standard could have an adverse impact on the market for corn-based ethanol in California if corn-based
ethanol fails to achieve lifecycle GHG emission reductions and in other states if they adopt similar standards. This could have a negative
impact on our financial performance.
 
Our ethanol business may become subject to
various environmental and health and safety and property damage claims and liabilities.
 
Operation of our ethanol business exposes the
business to the risk of environmental and health and safety claims and property damage claims, such as failure to comply with environmental
regulations. These types of claims could also be made against our ethanol business based upon the acts or omissions of other persons.
Serious claims could have a material negative impact on our results of operations, financial position and future cash flows.
 
Our business is not diversified.
 
Our financial results depend heavily on our ability
to operate our ethanol plants profitably. Our lack of diversification could have a material negative impact on our results of operations,
financial position and future cash flows should our ethanol plants operate unprofitably.
 
We may not be able to meet commitments to produce
and sell ethanol.
 
We may, at times, sell our products with forward
contracts. If we are unable to produce the products due to economic conditions, business interruption, or other factors, we may incur
additional costs or have to obtain commodities at unfavorable prices to meet our contractual commitments. This could have a material adverse
effect on our results of operations.
 
We may not be able to meet commitments to purchase
commodities.
 
We may, at times, purchase certain commodities
with forward contracts without a corresponding quantity of ethanol sold via forward contracts at known prices. Should ethanol and by-product
prices decline to levels that would lead to significant unprofitable results of operations, we may incur additional costs and/or losses
to meet our contractual commitments. This could have a material adverse effect on our results of operations.

 16


Our revenue from the sale of distillers grains
depends upon its continued market acceptance as an animal feed.
 
Distillers grains is a by-product from the fermentation
of corn to produce ethanol. Antibiotics may be used during the fermentation process to control bacterial contamination; therefore, antibiotics
may be present in small quantities in distillers grains marketed as animal feed. The U. S. Food and Drug Administration’s Center
for Veterinary Medicine has expressed concern about potential animal and human health hazards from the use of distillers grains as an
animal feed due to the possibility of antibiotic residues. If the public became concerned about the impact of distillers grains in the
food supply or as an acceptable animal feed, the market for distillers grains could be negatively impacted, which would have a negative
impact on our results of operations. We may not be able to obtain a suitable replacement for antibiotics, should this be required, which
would also negatively impact the market for distillers grains.
 
An estimated 34% of distillers grains produced
in the United States were exported in 2023. The price of distillers grains has benefitted from the exports of the product. In recent years,
certain countries have refused to import U.S. distillers grains for a variety of reasons. If export shipments are rejected or delayed,
the market price for distillers grains would be negatively impacted, which would have a negative impact on our ethanol results of operations.
 
We extract distillers corn oil immediately prior
to the production of distillers grains. Several studies are attempting to determine whether distillers corn oil extraction may impact
the nutritional value of the resulting distillers grains. If it is determined that distillers corn oil extraction adversely impacts the
nutritional energy content of distillers grains, the value of the distillers grains we sell may be negatively impacted, which would have
a negative impact on our results of operations.
 
We face significant competition
in the ethanol industry.
 
We face significant competition
for new ethanol investment opportunities. Many of our competitors are larger and have greater financial resources and name recognition
than we do. We must compete for investment opportunities based on our strategy of supporting and enhancing local development of ethanol
plant opportunities. We may not be successful in competing for investment opportunities based on our strategy.
 
The ethanol industry is primarily
comprised of entities that engage exclusively in ethanol production and large integrated grain companies that produce ethanol along with
their base grain business. Several large oil companies have entered the ethanol production market. If these companies increase their ethanol
plant ownership or if other oil companies seek to engage in direct ethanol production, there would be less of a need to purchase ethanol
from independent producers such as our ethanol plants. No assurance can be given that our ethanol plants will be able to compete successfully
or that competition from larger companies with greater financial resources will not have a materially adverse impact on the results of
our ethanol operations.
 
We may face competition from
foreign producers.
 
There is a risk of foreign competition
in the ethanol industry. Brazil is presently the second largest producer of ethanol in the world. Brazil’s ethanol production is
mostly sugarcane based, and, depending on feedstock prices, may be cheaper to produce than corn-derived ethanol. Under the RFS, certain
parties were obligated to meet an advanced biofuel standard. In recent years, sugarcane-based ethanol imported from Brazil has been one
of the most economical means for obligated parties to comply with this standard.
 
If significant additional foreign
ethanol production capacity is created, such facilities could create excess supplies of ethanol, which may result in lower prices of ethanol.
In addition, foreign ethanol producers may

 17


be able to produce ethanol at
costs lower than ours. These risks could have significant adverse effects on our financial performance.
 
We are exposed to credit
risk from our sales of ethanol and distillers grains to customers.
 
The inability of a customer
to make payments to us for our accounts receivable may cause us to experience losses and may adversely impact our liquidity and our ability
to make our payments when due.
 
We may not be able to hire
and retain qualified personnel to operate our ethanol plants and carbon sequestration facility.
 
Our ability to attract and retain
competent personnel has a significant impact on operating efficiencies and plant profitability. Competition for key plant employees in
the ethanol industry can be intense, and there has been an increased demand for workers in the U.S. We may not be able to attract and
retain qualified employees. Failure to do so could have a negative impact on our financial results at individual plants.
 
Our plants depend on an uninterrupted supply of energy and water
to operate. Unforeseen plant shutdowns could harm our business.
 
Our plants require a significant and uninterrupted
supply of natural gas, electricity and water to operate. We generally rely on third parties to provide these resources. If there is an
interruption in the supply of energy or water for any reason, such as supply, delivery or mechanical problems and we are unable to secure
an adequate alternative supply to sustain plant operations, we may be required to stop production. A production halt for an extended period
of time could result in material losses.
 
We rely on information technology in our operations
and financial reporting and any material failure, inadequacy, interruption or security breach of that technology could harm our ability
to efficiently operate our business and report our financial results accurately and timely.
 
We rely heavily on information technology systems
across our operations, including for management of inventory, purchase orders, production, invoices, shipping, accounting and various
other processes and transactions. Our ability to effectively manage our business, coordinate the production, distribution and sale of
our products and ensure the timely and accurate recording and disclosure of financial information depends significantly on the reliability
and capacity of these systems. While we have taken appropriate precautions to protect our systems, and to date, we have not experienced
any material adverse events related to a security breach or cyber-attack, the failure of these systems to operate effectively, problems
with transitioning to upgraded or replacement systems, or a breach in security of these systems through a cyber-attack or otherwise could
cause delays and/or interruptions in plant operations, product sales, reduced efficiency of our operations and delays in reporting our
financial results. Significant capital investments could be required to remediate any such problem. Security breaches of employee information
or other confidential or proprietary data could also adversely impact our reputation and could result in litigation against us or the
imposition of penalties.
 
We are exposed to potential business disruption
from factors outside our control, including natural disasters, severe weather conditions, accidents, pandemic diseases, international
disputes, and unforeseen operational failures any of which could negatively affect our transportation operations and could adversely affect
our cash flows and operating results.
 
Potential business disruption in available transportation
due to natural disasters, severe weather conditions, the outbreak of a pandemic disease, significant track damage resulting from a train
derailment, strikes or other interruptions by our transportation providers could result in delays in procuring and supplying raw materials

 18


to our ethanol facilities, or transporting ethanol
and distillers grains to our customers. Such business disruptions may result in our inability to meet customer demand or contract delivery
requirements, as well as the potential loss of customers.
 
We ship much of our products and receive a
portion of our corn via rail, which involves risks involving potential regulatory changes that could adversely affect our cash flows and
operating results.
 
A large portion of our ethanol and distillers
grains sales are shipped via rail. In addition, we receive some corn via rail. Given the notoriety of recent major train derailments,
it is possible that additional regulations could be enacted. Any changes to existing laws and regulations, or new laws and regulations,
including voluntary measures taken by the rail industry, could result in higher shipping costs, or new requirements for the design, construction
or operation of tank cars that transport hazard materials, such as ethanol. In addition, any derailments involving our products could
result in legal claims being brought against us that could involve significant liabilities.
 
We operate in a capital intensive industry.
Limitations on external financing could adversely affect our financial performance.
 
We may need to incur additional financing to fund
growth of our business or in times of increasing liquidity requirements (such as increases in raw material costs). Bankruptcy filings
by several ethanol companies in past years and capital market volatility has reduced available capital for the ethanol industry. Any delays
in obtaining additional financing, or our inability to do so, could have a material adverse impact on our financial results.
 
During the early months of 2020, a new strain
of COVID-19 spread into the United States and other countries.
 
In an effort to contain the spread of this virus,
there were various government mandated restrictions, in addition to voluntary privately implemented restrictions, including limiting public
gatherings, retail store closures, restrictions on employees working and the quarantining of people who may have been exposed to the virus.
The above actions led to reduced demand for ethanol. If in the future, this or other viruses surface, it could lead to prolonged production
stoppages at our ethanol plants and could result in an adverse material impact on the results of operations and on our financial position.
We idled our NuGen and One Earth ethanol plants for portions of fiscal year 2020, largely due to the impact of the pandemic.
 
Risks Related to our Refined Coal Operations
 
We believe our refined coal production company
qualified to earn tax credits under IRC Section 45 through November 18, 2021. Our ability to avoid write-offs in connection with this
investment is subject to various risks and uncertainties. These include, but are not limited to, the risks and uncertainties as set forth
below.
 
Availability of the tax credits under IRC Section 45.
 
Our ability to claim tax credits under IRC Section
45 depends upon our refined coal operation satisfying certain conditions set forth in IRC Section 45. The IRS could ultimately determine
that our refined coal facility and/or its operations did not satisfy the conditions set forth in IRC Section 45. This operation is currently
under audit by the IRS and if we were to lose these tax credits, it could have a material adverse impact on our results of operations.

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Our refined coal operation and its by-products may result in environmental
and product liability claims and environmental compliance costs.
 
The construction and operation of refined coal
operations were subject to Federal, state and local laws, regulations and potential liabilities arising under or relating to the protection
or preservation of the environment, natural resources and human health and safety. Such laws and regulations generally require the operations
and/or the utilities at which the operations are located to obtain and comply with various environmental registrations, licenses, permits,
inspections and other approvals. Such laws and regulations also impose liability, without regard to fault or the legality of a party’s
conduct, on certain entities that are considered to have contributed to, or are otherwise involved in, the release or threatened release
of hazardous substances into the environment. Such risk remains even after production ceases at an operation to the extent the environmental
damage can be traced to the types of chemicals or compounds used or operations conducted in connection with the use of refined coal.
 
Our insurance may not cover all environmental
risk and costs or may not provide sufficient coverage in the event of an environmental claim. If significant uninsured losses arise from
environmental damage or product liability claims, or if the costs of environmental compliance increase for any reason, our results of
operations and financial condition could be adversely affected.
 
We will have to generate taxable income to
utilize the Section 45 federal production tax credits.
 
If we do not generate sufficient taxable income
to utilize the tax credits earned by our refined coal operation, we could incur write-offs of the related tax attributes which could adversely
affect our results of operations and financial condition.
 
We used patented technology.
 
As part of the operations, we paid a license fee
for patented technology. If our third-party operator is subject to patent infringement claims, we may incur legal fees to defend our position
and be subject to additional costs and fees.
 
Risks Related to REX and General Risk Factors
 
We have concentrations of cash deposits at
financial institutions that exceed federal insurance limits.
 
We generally have cash deposits that exceed federal
insurance limits. Should the financial institutions we deposit our cash in experience insolvency or other financial difficulty, our access
to cash deposits could be limited. In extreme cases, we could lose our cash deposits entirely. This would negatively impact our liquidity
and results of operations.

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We may fail to realize the anticipated benefits
of mergers, acquisitions, or other investments.
 
We intend to continue seeking growth opportunities.
Acquisitions and similar transactions involve many risks that could harm our business, which include:

●The anticipated benefits of these transactions may not be fully realized, or take longer to realize than
expected,

●Future acquisitions could result in operating losses or loss of investment,

●Future acquisitions may involve incurring debt to complete these transactions, which could have a material
adverse effect on our financial condition,

●Future acquisitions may require us to invest a significant portion of our excess cash, which could have
a material adverse effect on our financial condition, and

●Our carbon sequestration investment may not be successful.
 
Rising focus on environmental, social and corporate
governance matters from investors and regulators may increase our operating costs, bring down the value of our products and assets, and
impact our ability to access capital markets.
 
Global climate change continues to receive significant
attention from the public and the scientific community concerning the impacts from human activity, particularly the impact of greenhouse
gas emissions, such as those from carbon dioxide and methane. The current federal administration’s focus on environmental issues
has added pressure to take action domestically where there was already a heavier focus internationally. International, national, and local
regulations are likely to increase in the coming years. Added requirements to reduce greenhouse gas emissions may increase our production
costs. In addition, legislation promoting alternatives to combustion engine vehicles could reduce the demand for our products.
 
Climate change is also thought by some to be the
cause for an increase in extreme weather events such as increased intensity of storms, rising sea levels, as well as heavy rains or droughts
in areas historically less prone to those events. Any of these events can have a significant impact on our operations or quality of raw
materials we purchase, resulting in increased costs. At this time, we are unable to determine the financial impact of any potential adverse
weather events caused by climate change.
 
Incremental to legislative and regulatory pressure,
institutional investors have continued to adopt environmental, social and governance guidelines (ESG). Some investors, including certain
public and private fund management firms, pension funds, university endowments and family offices, have in recent years, begun adding
stated policies to reduce or eliminate fossil fuel equities and encouraging additional consideration of ESG practices in a manner that
could negatively impact our stock price. This may also result in a reduction of available capital funding for potential development projects,
further impacting our future financial results.
 
Federal, state and local jurisdictions may
challenge our tax return positions.
 
We use significant judgments, estimates and interpretation
and application of complex tax laws in preparing the tax returns we file, and the positions contained therein. We believe that our tax
return positions are fully supportable. However, certain positions may be successfully challenged by federal, state and local jurisdictions.
We are currently undergoing a federal income examination related to tax credits claimed for the years ended January 31, 2015 through 2022.
This could result in material additional income tax payments we would have to make and higher income tax expense in future periods.
 

Item 1B.Unresolved Staff Comments
 
None.

 21



Item 1C.Cybersecurity
 
Our ability to effectively manage our business,
coordinate the production, distribution and sale of our products and ensure the timely and accurate recording and disclosure of financial
information depends significantly on the reliability and capacity of our information technology systems. While we have taken what we believe
are appropriate precautions to protect our systems, and to date, we have not experienced any material adverse events related to a security
breach or cyber-attack, the failure of these systems to operate effectively, the failure of our personnel to follow established procedures,
problems with transitioning to upgraded or replacement systems, or a breach in security of these systems through a cyber-attack or otherwise
could cause delays and/or interruptions in plant operations, product sales, reduced efficiency of our operations and delays in reporting
our financial results.
 
As part of our routine and periodic overall risk
management system or processes, we have incorporated various processes related to cybersecurity. Key cybersecurity controls, such as access
controls, are included within our internal control framework that we assess annually as part of Management’s Annual Report on Internal
Control Over Financial Reporting. Additionally, periodic discussions are held with outsourced IT professionals for both corporate and
consolidated plant environments to determine if appropriate actions are being taken to address potential risks. Through the assistance
of our qualified third-party IT professionals, we have implemented numerous security measures, including, but not limited to, multi-factor
authentication on critical systems, password requirements, access controls, and data encryption. Our IT policies and procedures include
the expectations of all employees and all third parties who may be given access to our IT systems to maintain the security of our IT systems.
 
Our commitment to the overall security of our
information technology systems starts at the highest levels of our Company, the Board of Directors and management. Management and the
Board of Directors provide oversight surrounding cybersecurity. Management oversees internal controls and the company-wide risk assessment
process. The Audit Committee is provided with regular updates by management regarding the control framework and whether any significant
deficiencies or material weaknesses exist in the IT control environment. The Audit Committee is also tasked with determining the appropriate
response to any submissions through the corporate whistleblower policy. The whistleblower policy includes the opportunity for employees
of the Company to notify the Audit Committee confidentially and anonymously of any concerns regarding cybersecurity, in addition to any
accounting, internal accounting controls or auditing matters. The audit committee will report any significant matters to the Board of
Directors.
 
As of January 31, 2024, we had not identified
an indication of a cybersecurity incident that would have a material impact on our business and consolidated financial statements.
 

Item 2.Properties
 
The information required by this Item 2 is set
forth in Item 1 of this report under “Ethanol Investments” and “Facilities”.
 

Item 3.Legal Proceedings
 
We are, from time to time, involved in various
legal proceedings incidental to the conduct of our business. We believe that any current proceedings will not have a material adverse
effect on our financial condition or results of operations.

 22



Item 4.Mine Safety Disclosures
 
Not Applicable.
 
Information About Our Executive Officers
 
Set forth below is certain information about each
of our executive officers.
 


Name
Age
Position

 
 
 

Stuart Rose
69
Executive Chairman of the Board*

Zafar Rizvi
74
Chief Executive Officer and President*

Douglas Bruggeman
63
Vice President-Finance, Chief Financial Officer and Treasurer

Edward Kress
74
Secretary*

*Also serves as a director.
 
Stuart Rose was elected our Executive Chairman
of the Board in 2015. Mr. Rose had served as our Chairman of the Board and Chief Executive Officer since our incorporation in 1984 as
a holding company. Prior to 1984, Mr. Rose was Chairman of the Board and Chief Executive Officer of Rex Radio and Television, Inc., which
he founded in 1980 to acquire the stock of a corporation which operated four retail stores.
 
Zafar Rizvi was elected Chief Executive
Officer in 2015. Mr. Rizvi has been our President and Chief Operating Officer since 2010, was Vice President from 2006 to 2010. From 1991
to 2006, Mr. Rizvi was our Vice President – Loss Prevention.
 
Douglas Bruggeman has been our Vice President–Finance
and Treasurer since 1989 and was elected Chief Financial Officer in 2003. From 1987 to 1989, Mr. Bruggeman was our Manager of Corporate
Accounting. Mr. Bruggeman was employed with the accounting firm of Ernst & Young prior to joining us in 1986.
 
Edward Kress has been our Secretary since
1984. Mr. Kress has been a partner of the law firm of Dinsmore & Shohl LLP (formerly Chernesky, Heyman & Kress P.L.L.),
our legal counsel, since 1988. Mr. Kress has practiced law in Dayton, Ohio since 1974.
 
PART II
 

Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
 
Shareholder Information
 
Our common stock is traded on the New York Stock
Exchange under the symbol REX.
 
As of March 28, 2024, there were 70 holders of
record of our common stock, including shares held in nominee or street name by brokers.
 
Dividend Policy
 
The Company has no history of paying cash dividends
on our common stock.

 23


Issuer Purchases of Equity Securities
 
On August 31, 2021, our Board of Directors increased
our share repurchase authorization by an additional 1,500,000 shares (split-adjusted). At January 31, 2024, a total of 876,786 shares
remained available to purchase under this authorization.
 
There were no share repurchases in the fourth
quarter of fiscal year 2023.
 
Equity Compensation Plans
 
Refer to Item 12 – Security Ownership of
Certain Beneficial Owners and Management and Related Stockholder Matters for information regarding shares authorized for issuance under
equity compensation plans.
 
Performance Graph
 
The following graph compares the yearly percentage
change in the cumulative total shareholder return on our Common Stock against the cumulative total return of the S&P 500 Stock Index
and a peer group comprised of Alto Ingredients, Inc. and Green Plains, Inc. for the period commencing January 31, 2019 and ended January
31, 2024. The graph assumes an investment of $100 in our Common Stock and each index on January 31, 2019 and reinvestment of all dividends.
 
Comparison of 5 Year Cumulative Total Return

Assumes Initial Investment of $100

January 2024


 

Item 6.[Reserved]

 24



Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
Overview
 
We have been an investor in ethanol production
facilities beginning in 2006 and were an investor in a refined coal production facility during the period from 2017 through November 2021.
We currently have equity investments in three ethanol production entities, two of which are majority ownership interests. Our refined
coal business ceased operations in November 2021 and the facility was subsequently sold. We have classified the refined coal business
as discontinued operations. We may make additional alternative energy investments in the future and are currently working on a carbon
sequestration project near our One Earth Energy location.
 
Our ethanol operations are highly dependent on
commodity prices, especially prices for corn, ethanol, distillers grains, distillers corn oil and natural gas, and availability of corn.
As a result of price volatility for these commodities, our operating results can fluctuate substantially. The price and availability of
corn is subject to significant fluctuations depending upon several factors that affect commodity prices in general, including crop conditions,
the amount of corn stored on farms, weather, federal policy, foreign trade, and international disruptions caused by wars or conflicts.
Because the market prices of ethanol and distillers grains are not always directly related to corn prices (for
example, demand for crude and other energy and related prices, the export market demand for ethanol and distillers grains, soybean meal
prices, and the results of federal policy decisions and trade negotiations can impact ethanol and distillers grains prices), at
times ethanol and distillers grains prices may not follow movements in corn prices and, in an environment of higher corn prices or lower
ethanol or distillers grains prices, reduce the overall margin structure at the plants. As a result, at times, we may operate our plants
at negative or minimally positive operating margins.
 
We expect our ethanol plants to produce approximately
2.9 gallons of denatured ethanol for each bushel of corn processed in the production cycle. We refer to the actual gallons of denatured
ethanol produced per bushel of corn processed as the realized yield. We refer to the difference between the price per gallon of ethanol
and the price per bushel of corn (divided by the realized yield) as the “crush spread.” Should the crush spread decline, it
is possible that our ethanol plants will generate operating results that do not provide adequate cash flows for sustained periods of time.
In such cases, production at the ethanol plants may be reduced or stopped altogether in order to minimize variable costs at individual
plants.
 
We attempt to manage the risk related to the volatility
of commodity prices by utilizing forward corn and natural gas purchase contracts, forward ethanol, distillers grains and distillers corn
oil sale contracts, and commodity futures agreements, as management deems appropriate. We attempt to match quantities of these sales contracts
with an appropriate quantity of corn purchase contracts over a given period of time when we can obtain an adequate gross margin resulting
from the crush spread inherent in the contracts we have executed. However, the market for future ethanol sales contracts generally lags
the spot market with respect to ethanol prices. Consequently, we generally execute fixed price contracts for no more than four months
into the future at any given time and we may lock in our corn or ethanol price without having a corresponding locked in ethanol or corn
price for short durations of time. As a result of the relatively short period of time our fixed price contracts cover, we generally cannot
predict the future movements in our realized crush spread for more than four months; thus, we are unable to predict the likelihood or
amounts of future income or loss from the operations of our ethanol facilities.
 
We reported net income attributable to REX common
shareholders of $60.9 million in fiscal 2023 compared to approximately $27.7 million in fiscal 2022. Our ethanol business had increased
profits in fiscal 2023 compared to fiscal 2022 as a result of higher crush spreads in fiscal 2023. The two largest drivers of ethanol
profitability are corn and ethanol pricing, both of which experienced significant volatility within the year. Chicago Board of Trade corn
prices per bushel ranged from a low of $4.40 in January 2024 to a high of $6.85

 25


in February 2023. S&P Global Platts ethanol
pricing per gallon ranged from a low of $1.52 in January 2024 to a high of $2.67 in June 2023.
 
On August 10, 2017, we purchased, through a 95.35%
owned subsidiary, the entire ownership interest of an entity that owned a refined coal facility. We began operating the refined coal facility
immediately after the acquisition. As the plant was no longer eligible to receive federal production tax credits beginning on November
18, 2021, we ceased operations on that date and subsequently sold the facility. We began classifying this operation as discontinued operations
in the third quarter of fiscal 2021.
 
One
Earth Sequestration, LLC, a wholly owned subsidiary of One Earth Energy, LLC, is in the developmental stage of a carbon
sequestration project near the One Earth Energy ethanol plant. A test well has been drilled to a total depth of approximately 7,100
feet, in which almost 2,000 feet of Mt. Simon Sandstone was encountered, which is the geological formation that is the
region’s primary carbon storage resource. Three-dimensional seismic testing has been performed, as well as geological modeling
for predicting the movement of injected carbon and the plume area to determine maximum injection pressure, reservoir quality and
storage capacity for the potential wells. In October 2022, we applied for a Class VI injection well permit for three wells with the
U.S. Environmental Protection Agency (“EPA”). In addition, we have begun construction of a facility to capture,
dehydrate, and compress carbon dioxide from the One Earth Energy ethanol plant to a state suitable for sequestration. We expect to
complete construction by July 31, 2024, at which time testing of the facility could commence, upon completion of other
infrastructure. In October 2023, we submitted an application with the Illinois Commerce Commission to build a short pipeline to
deliver carbon dioxide from the ethanol plant to the sequestration site. We continue to pursue obtaining a county special-use zoning
permit. Although we have made meaningful progress and significant investments in this project, we continue to complete required
documentation for various government agencies and obtain permits and other approvals with no assurances of ultimate success. 
 
NuGen Energy, LLC, our majority owned ethanol plant in Marion, South Dakota,
signed an agreement to be part of Summit Carbon Solutions’ carbon capture and storage pipeline. Should Summit Carbon Solutions be
able to obtain all necessary permits and approvals, the agreement would allow NuGen to share in the economic benefits of tax credits through
the sale of the carbon dioxide output of its ethanol production facility for sequestration, as well as reduce its net carbon emissions.
 
We plan to seek and evaluate various investment
opportunities including ethanol and/or energy related, carbon sequestration, agricultural or other ventures we believe fit our investment
criteria. We can make no assurances that we will be successful in our efforts to find such opportunities.
 
Ethanol Investments
 
In fiscal year 2006, we entered the ethanol industry
by investing in several entities organized to construct and subsequently operate ethanol producing plants. We are invested in three entities
as of January 31, 2024, utilizing equity investments.
 
The following table is a summary of our ethanol
entity ownership interests at January 31, 2024:
 



 
Entity

 
Location
REX's Current Ownership Interest

One Earth Energy, LLC
Gibson City, IL
75.8%

NuGen Energy, LLC
Marion, SD
99.7%


Big River Resources, LLC:
Big River Resources W Burlington, LLC
Big River Resources Galva, LLC
Big River United Energy, LLC
Big River Resources Boyceville, LLC

 
W. Burlington, IA
Galva, IL
Dyersville, IA
Boyceville, WI

 
10.3%
10.3%
5.7%
10.3%

 
 
The three entities own a total of six ethanol
production facilities, which in aggregate shipped approximately 716 million gallons of ethanol over the twelve-month period ended January
31, 2024. REX’s effective ownership of gallons shipped, for the twelve-month period ended January 31, 2024, by the ethanol production
facilities in which we have ownership interests was approximately 290 million gallons.

 26


Trends and Uncertainties
 
Renewable Fuel Standard II (“RFS II”),
established in October 2010, has been an important factor in the growth of ethanol usage in the United States. In recent years, there
has been much uncertainty in the enforcement of RFS II. When it was originally established, RFS II required the volume of “conventional”
or corn derived ethanol to be blended with gasoline to increase each year until it reached 15.0 billion gallons in 2015 and required that
it remain at that level through 2022. There are no established congressional target volumes beginning in 2023. The EPA has the authority
to waive the biofuel mandate, in whole or in part, if there is inadequate domestic renewable fuel supply or the requirement severely harms
the domestic economy or environment. In addition, under RFS II, a small refiner that processes less than 75,000 barrels of oil per day
can petition the EPA for a waiver of their requirement to submit renewable identification numbers (“RINs”). The EPA, through
consultation with the Department of Energy and the Department of Agriculture, can grant the refiner a full or partial waiver, or deny
the waiver. The EPA issued 88 refinery exemptions for 2016-2018 compliance years, undercutting the statutory renewable fuel volumes by
a total of 4.3 billion gallons. The EPA has not granted any small refinery waivers for 2019-2022 and has continued that stance in the
proposed volumes for 2023-2025. There remain multiple ongoing legal challenges on how the EPA has handled the small refinery waivers,
including on November 22, 2023, the Fifth U.S. Circuit Court of Appeals (the “Court”) ruled against the EPA on six SREs the
EPA had previously denied. The Court remanded those six petitions back to the EPA and each refinery will continue to operate under temporary
SREs previously offered to them by the Court.
 
The EPA has issued Renewable Fuel Standard
volume obligations for calendar years 2023-2025. The volumes from conventional biofuels (which includes corn-based ethanol) were 15.0
billion gallons for 2023 through 2025. Additionally, in 2023, the EPA restored 250 million gallons previously waived.
 
The Inflation Reduction Act of 2022 will likely
impact our business by creating a new Clean Fuel Production Credit, section 45Z of the Internal Revenue Code (“45Z”), available
for years 2025 to 2027. The Clean Fuel Production Credit is established at approximately $0.02 per ethanol gallon per CI point reduction
below a 50 CI score threshold. The Act also raises the carbon capture tax credit from $50 per metric ton to $85 per metric ton, under
section 45Q of the Internal Revenue Code (“45Q”). Taxpayers may elect to be treated as making a payment against tax for 100%
of the value of the 45Q credit (“direct pay”) for the first five years, starting with the year a qualifying carbon sequestration
facility is placed in service, but not beyond December 31, 2032. Companies may elect either the 45Q credit or the 45Z credit in periods
in which both tax credits are available. Other potential impacts include (a) extending the biodiesel tax credit, which could impact our
renewable corn oil values, as this co-product serves as a low-carbon feedstock for renewable diesel and biomass based diesel production;
(b) creating a new tax credit for sustainable aviation fuel; (c) funding biofuel refueling infrastructure which could impact the availability
of higher level ethanol blended fuel; and (d) providing for production and purchase credits for electric vehicles, which could impact
the amount of internal combustion engines on the road over time, and ultimately reduce the demand for gasoline, diesel fuels and ethanol.
 
Should these trends and uncertainties continue,
our future operating results could be impacted.

 27


Results of Operations
 
The following table summarizes our results from operations (amounts
in thousands):
 


  
Fiscal Year 

  
2023  
2022 

  
    
   

Net sales and revenue 
$833,384  
$855,000 

Cost of sales 
 735,166  
 806,398 

Gross profit 
$98,218  
$48,602 

  
    
   

Income before income taxes 
$98,484  
$47,479 

  
    
   

Provision for income taxes 
$(22,560)  
$(9,542) 

  
    
   

Net income attributable to REX common shareholders 
$60,935  
$27,697 

 
The following table summarizes net sales and revenue by product group
(amounts in thousands):
 


  
Fiscal Year 

  
2023  
2022 

  
    
   

Ethanol 
$635,420  
$649,501 

Dried distillers grains 
 139,173  
 139,118 

Distillers corn oil 
 52,935  
 55,595 

Modified distillers grains 
 5,584  
 11,579 

Derivative financial instruments losses 
 (37)  
 (1,024) 

Other 
 309  
 231 

Total 
$833,384  
$855,000 

 
The following table summarizes selected operating data:
 


  
Fiscal Year 

  
2023  
2022 

  
    
   

Average selling price per gallon of ethanol (net of hedging) 
$2.22  
$2.44 

Gallons of ethanol sold (in millions) 
 285.9  
 265.8 

Average selling price per ton of dried distillers grains 
$213.55  
$232.98 

Tons of dried distillers grains sold 
 651,698  
 597,126 

Average selling price per pound of distillers corn oil 
$0.60  
$0.71 

Pounds of distillers corn oil sold (in millions) 
 87.5  
 77.8 

Average selling price per ton of modified distillers grains 
$103.54  
$123.66 

Tons of modified distillers grains sold 
 53,936  
 93,637 


 28


Comparison of Fiscal Years 2023 and 2022 (Consolidated
Results)
 
Net Sales and Revenue – Net
sales and revenue in fiscal year 2023 decreased approximately 3% compared to fiscal year 2022. While quantities sold at our consolidated
plants during fiscal year 2023 did increase from 2022, weaker pricing across all our products in fiscal year 2023 contributed to the overall
decrease in sales between the two fiscal years.
 
Ethanol sales decreased in fiscal year 2023 compared
to fiscal year 2022 as the average price per gallon decreased 9%, offset partially by an increase in gallons sold of 8%. The decrease
in ethanol selling price resulted primarily from a decrease in commodity prices.
 
Dried distillers grains sales remained nearly
flat for fiscal year 2023 compared to fiscal year 2022, increasing $55,000 year-over-year, as the average price per ton sold decreased
8%, offset by an increase in tons sold of 9%. The decrease in the dried distillers
grains selling price resulted primarily from a decrease in corn prices as dried distillers grains prices often correlate with corn pricing.
The increase in tons sold was a result of increased ethanol production during fiscal year 2023.
 
Distillers corn oil sales decreased 5% in fiscal
year 2023 compared to fiscal year 2022 as the average selling price per pound decreased approximately 15%. The
decrease in the distillers corn oil selling price resulted primarily from a decrease in commodity prices. The price decrease was partially
offset by an increase in pounds sold of 12%.
 
Modified distillers grains sales decreased 52%
in fiscal year 2023 compared to fiscal year 2022 as the number of tons sold decreased 42%, coupled with a 16% decrease in the average
selling price per ton. The decrease in the modified distillers grains selling price resulted primarily from a decrease in corn prices
as distillers grain pricing often correlates with corn pricing. Our consolidated plants’
decisions to sell modified or dried distillers grains fluctuate from time to time based upon market conditions.
 
Losses on derivative financial instruments were
insignificant during fiscal year 2023, compared to losses of $1.0 million in fiscal year 2022. Losses
are related to our risk management activities and were impacted by the price movements and types of contracts entered into at one of our
consolidated ethanol plants.
 
Cost of Sales – Cost of sales
for fiscal year 2023 decreased approximately $71.2 million, or 9%, over fiscal year 2022. Corn accounted for approximately 80% ($584.2
million) of our cost of sales during fiscal year 2023 compared to approximately 83% ($667.3 million) during fiscal year 2022. The cost
of corn decreased due to lower corn prices, offset by an increase in corn used between the two periods. Natural gas accounted for approximately
4% ($31.7 million) of our cost of sales during fiscal year 2023 compared to approximately 6% ($47.4 million) during fiscal year 2022.
The natural gas dollar decrease was primarily attributable to a decrease in the cost per unit.
 
Gross Profit – As a result
of the foregoing, gross profit for fiscal year 2023 increased approximately $49.6 million, or 102%, over fiscal year 2022. Gross profit
in fiscal year 2023 was 11.8% of net sales and revenue, versus approximately 5.7% of net sales and revenue in fiscal year 2022.
 
We attempt to match quantities of ethanol, distillers
grains and distillers corn oil sale contracts with an appropriate quantity of grain purchase contracts over a given period of time when
we can obtain an adequate margin resulting from the crush spread inherent in the contracts we have executed. However, the market for future
ethanol sales contracts generally lags the spot market with respect to ethanol price. Consequently, we generally execute fixed price contracts
for no more than four months into the future at any given time and we may lock in our corn or ethanol price without having a corresponding
locked in ethanol or corn price for short durations of time. As a result of the relatively short period of time our fixed price contracts
cover, we generally

 29


cannot predict the future movements in our realized
crush spread for more than four months. We utilize derivative financial instruments, primarily exchange traded commodity future contracts
and swaps, in conjunction with our grain procurement and commodity marketing activities.
 
Selling, General and Administrative (“SG&A”)
Expenses – SG&A expenses for fiscal year 2023 were approximately $29.4 million (3.5% of net sales and revenue), an increase
of approximately $6.6 million or 29% from approximately $22.8 million (2.7% of net sales and revenue) for fiscal year 2022. The increase
was primarily related to the increase in performance bonus expense as a result of higher net income in 2023. In addition, the increase
was also impacted by restricted stock awards granted to certain executive officers in the second quarter of 2023, which were expensed
upon issuance.
 
Equity in Income of Unconsolidated Ethanol
Affiliates – During fiscal years 2023 and 2022, we recognized income of approximately $13.9 million and $8.7 million, respectively,
from our equity investment in Big River Resources, LLC (“Big River”). Our investment in Big River, which has interests in
four ethanol production plants, represents an effective ownership of approximately 38.4 million gallons of ethanol shipped in the trailing
twelve months ended January 31, 2024.
 
We expect the operating experience of Big River
to be generally consistent with the trends in crush spread margins described in the “Overview” section as Big River’s
results are dependent on the same key drivers as our other ethanol investments (ethanol, corn, dried distillers grains and natural gas
pricing).
 
Interest and Other Income –
Interest and other income for fiscal year 2023 was approximately $15.7 million compared to approximately $13.0 million for fiscal year
2022. During the second quarter of 2022, the Company’s consolidated plants received
COVID-19 relief grants from the USDA totaling approximately $7.8 million based on reduced production in 2020. Each plant received an additional
payment from that program in 2023, combined totaling approximately $1.0 million. The remaining increase is primarily due to an increase
in interest income as yields on our excess cash increased during fiscal year 2023 compared to fiscal year 2022.
 
Income Before Income Taxes –
As a result of the foregoing, income before income taxes was approximately $98.5 million for fiscal year 2023 versus approximately $47.5
million for fiscal year 2022.
 
Provision for Income Taxes –
Our effective tax rate was a provision of 22.9% and 20.1% for fiscal years 2023 and 2022, respectively. Our effective rate is impacted
by the noncontrolling interests of the companies we consolidate, as we recognize 100% of their income or loss before income taxes and
noncontrolling interests and only provide an income tax provision or benefit for our portion of the subsidiaries’ income or loss.
During fiscal years 2023 and 2022, our effective tax rate increased 2.2% (approximately $2.2 million) and 1.1% (approximately $0.5 million),
respectively, as a result of section 162M compensation limitations. During fiscal year 2022, our effective tax rate decreased 5.4% (approximately
$2.5 million) from the statutory rate, as a result of research and experimentation credits from our ethanol plants. The amount of these
credits earned in future periods will vary depending on the level of qualifying research expenditures at our ethanol plants and changes
in tax law. We did not perform any qualifying research in fiscal year 2023. The provision for uncertain tax positions was insignificant
in fiscal year 2023 and increased our effective tax rate 4.8% (approximately $2.3 million) in fiscal year 2022 from the statutory rate.
 
Net Income from Continuing Operations
– As a result of the foregoing, net income from continuing operations was approximately $75.9 million for fiscal year 2023 versus
approximately $37.9 million for fiscal year 2022.
 
Noncontrolling Interests (continuing operations)
– Income attributable to noncontrolling interests (continuing operations) was approximately $15.0 million and $10.2 million
during fiscal years 2023 and 2022, respectively, and represents the other owners’ share of the income of NuGen and One Earth.

 30


Net Income Attributable to REX Common Shareholders
(continuing operations) – As a result of the foregoing, net income attributable to REX common shareholders (continuing operations)
was approximately $60.9 million for fiscal year 2023 compared to $27.7 million for fiscal year 2022.
 
Net Income
 
As there was no discontinued operations activity
in fiscal years 2023 and 2022, net income attributable to REX common shareholders was the same as net income attributable to REX common
shareholders (continuing operations).
 
Comparison of Fiscal Years 2022 and 2021
 
See “Item 7 Management’s discussion
and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended January 31,
2023.
 
Liquidity and Capital Resources
 
Our primary sources of cash have been income from
operations. Our primary uses of cash have been capital expenditures at our ethanol plants and carbon sequestration project, stock repurchases,
payments to noncontrolling interests holders and, in prior years, contributions to fund refined coal operating losses.
 
Outlook – Our cash and short-term
investments balance of approximately $378.7 million at January 31, 2024 included approximately $331.1 million held by One Earth and NuGen.
We expect that One Earth and NuGen will use a majority of their cash for working capital needs, capital expenditures, general corporate
purposes and dividend payments. One Earth Energy is currently working on a carbon sequestration project and is expected to have related
capital expenditure needs. We expect our equity method investee to limit the payment of dividends based upon their working capital and
capital expenditure needs.
 
We are investigating various uses of our excess
cash. We expect capital expenditures related to the construction at the One Earth
facilities to approximate $165 million to $175 million,
inclusive of the carbon sequestration project and plant capacity expansion and ongoing efforts to reduce CI scoring, which we currently
plan to pay from our available cash. As of January 31, 2024, we have spent $25.8 million since inception and are contractually committed
to spend an additional $22.6 million toward the carbon sequestration project. As of January 31, 2024, we have spent $12.8 million since
inception and are contractually committed to spend an additional $12.3 million toward plant capacity expansion and CI scoring reduction
efforts. For all projects, we plan to spend $125 million to $150 million during
fiscal year 2024.
 
We have a stock buyback program with an authorization
level of an additional approximately 877,000 shares at January 31, 2024. We typically repurchase our common stock when our stock price
is trading at prices we deem to be a discount to the underlying value of our net assets. We plan to seek and evaluate various investment
opportunities including ethanol and/or energy related, carbon sequestration related, agricultural or other ventures we believe fit our
investment criteria.
 
Operating Activities – Net
cash provided by operating activities was approximately $128.0 million for fiscal year 2023 compared to approximately $54.8 million in
fiscal year 2022. During fiscal year 2023, operating cash flow was provided by net income from continuing operations of approximately
$75.9 million and adjustments of approximately $20.2 million, which consisted of depreciation, amortization of operating lease right-of-use
assets, stock-based compensation expense, income from equity method investments, interest income from investments, loss on sale of property
and equipment, and the deferred income tax provision. Big River paid dividends to REX of approximately $12.0 million during fiscal year
2023. Accounts receivable decreased approximately $2.0 million, primarily a result of the timing of products shipped and the receipt of

 31


customer payments at One Earth and NuGen. Inventory
decreased approximately $21.8 million, primarily a result of smaller quantities of work-in-process materials and lower per unit costs
at January 31, 2024. Prepaid expenses and other assets increased approximately $4.5 million, primarily a result of increases in spare
parts of approximately $1.3 million, prepaid insurance of $0.3 million, refundable property taxes of approximately $0.5 million, hedging
of $1.8 million and the fair values of forward purchase contracts of approximately $0.5 million. Accounts payable increased approximately
$7.9 million, primarily a result of the timing of inventory receipts and vendor payments. Refundable income taxes increased $2.8 million
as a result of the timing of estimated tax payments. Accrued expenses and other liabilities decreased approximately $4.5 million, which
was primarily a result of operating lease payments of approximately $5.4 million and a decrease in accrued income taxes of $2.0 million,
partially offset by an increase in accrued payroll of approximately $3.8 million.
 
Net cash provided by operating activities was
approximately $54.8 million for fiscal year 2022. During fiscal year 2022, operating cash flow was provided by net income from continuing
operations of approximately $37.9 million and adjustments of approximately $14.6 million, which consisted of depreciation, amortization
of operating lease right-of-use assets, stock-based compensation expense, income from equity method investments, interest income from
investments, and the deferred income tax provision. Big River paid dividends to REX of approximately $6.3 million during fiscal year 2022.
Accounts receivable decreased approximately $0.7 million, primarily a result of the timing of products shipped and the receipt of customer
payments at One Earth and NuGen. Inventory increased approximately $6.5 million, primarily a result of larger quantities of work-in-process
materials and higher per unit costs at January 31, 2023. Prepaid expenses and other assets increased approximately $0.5 million, primarily
a result of an increase in spare parts of approximately $1.1 million and in prepaid insurance of $0.3 million, offset by a decrease in
the fair values of forward purchase contracts of $0.9 million. Accounts payable increased approximately $1.5 million, primarily a result
of the timing of inventory receipts and vendor payments. Refundable income taxes decreased $3.7 million as a result of the timing of estimated
tax payments. Accrued expenses and other liabilities decreased approximately $2.8 million, which was primarily a result of operating lease
payments of approximately $5.0 million partially offset by an increase in accrued income taxes of approximately $2.0 million.
 
Investing Activities – Net
cash provided by investing activities was approximately $28.4 million during fiscal year 2023 compared to net cash used in investing activities
of approximately $198.5 million during fiscal year 2022. Capital expenditures in fiscal year 2023 totaled approximately $37.7 million,
primarily for various capital projects at our consolidated ethanol plants, including $14.4 million for expansion and CI scoring reduction
projects at the One Earth facility and $15.5 million for the carbon sequestration project. During fiscal year 2023, we used cash of approximately
$448.5 million for purchases of short-term investments and received cash of approximately $514.6 million related to the maturity of these
types of these investments.
 
Net cash used in investing activities was approximately
$198.5 million during fiscal year 2022. Capital expenditures in fiscal year 2022 totaled approximately $15.6 million, the majority of
which were various projects at One Earth’s and NuGen’s ethanol plants, including approximately $10.6 million related to the
carbon sequestration project near the One Earth Energy ethanol plant. During fiscal year 2022, we used cash of approximately $399.4 million
for purchases of short-term investments and received cash of approximately $216.7 million related to maturities of these investments as
certain of these investments remained outstanding at January 31, 2023.
 
Financing Activities – Net
cash used in financing activities was approximately $4.3 million during fiscal year 2023 compared to approximately $17.0 million for fiscal
year 2022. During fiscal year 2023, we used cash of approximately $4.3 million to pay dividends to noncontrolling members of the entities
that own One Earth’s and NuGen’s ethanol plants.
 
Net cash used in financing activities was approximately
$17.0 million during fiscal year 2022. During fiscal year 2022, we purchased approximately 471,000 shares of our common stock for approximately
$13.0 million

 32


in open market transactions. During fiscal year
2022, we used cash of approximately $4.0 million to purchase shares from and pay dividends to noncontrolling members of the entities that
own One Earth’s and NuGen’s ethanol plants.
 
Based on our forecasts, which are primarily based
on estimates of plant production, prices of ethanol, corn, distillers grains, distillers corn oil and natural gas as well as other assumptions,
management believes that cash flow from operating activities together with working capital will be sufficient to meet One Earth’s
and NuGen’s respective liquidity needs. However, if a material adverse change in the financial position of One Earth or NuGen should
occur, or if actual sales or expenses are substantially different than what has been forecasted, One Earth’s and NuGen’s liquidity,
and ability to fund future operating and capital requirements could be negatively impacted.
 
Approximately 2.2% of our net assets are restricted
pursuant to the terms of various loan agreements of Big River, our equity method investee, as of January 31, 2024. None of our consolidated
subsidiaries or the parent company has restricted net assets at January 31, 2024.
 
Contractual Obligations and Commitments
 
In the ordinary course of business, we enter into
agreements under which we are legally obligated to make future cash payments. These agreements include obligations related to purchasing
inventory and natural gas and leasing rail cars. Aggregate minimum lease payments under the operating lease agreements for future fiscal
years as of January 31, 2024 totaled $14.7 million, with $5.1 million payable in the next twelve months. Refer to Note 7 – Leases
included in the notes to consolidated financial statements for more information. As of January 31, 2024, we had contracted future purchases
of corn, natural gas, natural gas pipeline lease and other contracts for capital expenditures at our ethanol plants valued at approximately
$126.3 million, with $123.0 million payable in the next twelve months. Refer to Note 11 – Commitments included in the notes to consolidated
financial statements for more information.
 
Seasonality and Quarterly Fluctuations
 
Our business is directly affected by the supply
and demand for ethanol. The demand for ethanol typically increases during the spring and summer months and during holiday travel.
 
Critical Accounting Policies
 
We believe the application of the following accounting
policies, which are important to our financial position and results of operations, require significant assumptions, judgments and estimates
on the part of management. We base our assumptions, judgments, and estimates on historical experience, current trends and other factors
that management believes to be relevant at the time our consolidated financial statements are prepared. On a regular basis, management
reviews the accounting policies, assumptions, estimates and judgments to ensure that our financial statements are presented in accordance
with generally accepted accounting principles (GAAP). However, because future events and their effects cannot be determined with certainty,
actual results could differ from our assumptions and estimates, and such differences could be material. Further, if different assumptions,
judgments and estimates had been used, the results could have been different and such differences could be material. For a summary of
all of our accounting policies, including the accounting policies discussed below, see Note 1 to the Consolidated Financial Statements.
 
Management believes that the following accounting
policies are the most critical to aid in fully understanding and evaluating our reported financial results, and they require management’s
most difficult, subjective, or complex judgments, resulting from the need to make estimates about the effect of matters that are inherently
uncertain.

 33


Revenue Recognition – We recognize
sales of ethanol, distillers grains and distillers corn oil when obligations under the terms of the respective contracts with customers
are satisfied; this occurs with the transfer of control of products, generally upon shipment from the ethanol plant or upon loading of
the rail car used to transport the products.
 
Impairment of Long-Lived Assets –
We review our long-lived assets, consisting of property and equipment, equity method investments and operating lease right-of-use assets,
for impairment whenever events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. We assess
long-lived assets for impairment by first determining the forecasted, undiscounted cash flows the asset group is expected to generate.
If this total is less than the carrying value of the asset, we will then determine the fair value of the asset group. An impairment loss
would be recognized in the amount by which the carrying amount of the asset exceeded the fair value of the asset. Significant management
judgement is required to determine the fair value of long-lived assets, which includes discounted cash flows. Such estimates could be
significantly affected by future changes in market conditions. We recorded no impairment charges in fiscal years 2023, 2022, and 2021.
 
Income Taxes – Income taxes
are recorded based on the current year amounts payable or refundable, as well as the consequences of events that give rise to deferred
tax assets and liabilities based on differences in how those events are treated for tax purposes, net of valuation allowances. We base
our estimate of deferred tax assets and liabilities on current tax laws and rates and other expectations about future outcomes. Changes
in existing regulatory tax laws and rates and future business results may affect the amount of deferred tax liabilities or the valuation
of deferred tax assets over time. We have established valuation allowances for certain state net operating loss carryforwards. We assessed
all available positive and negative evidence to determine whether we expect sufficient future taxable income will be generated to allow
for the realization of existing federal deferred tax assets. We believe there is sufficient objectively verifiable income for management
to conclude that it is more likely than not that the Company will utilize available federal deferred tax assets prior to their expiration.
However, realization of these deferred tax assets is not certain. Changes in our current estimates for factors such as unanticipated market
conditions and legislative developments could have a material effect on our ability to utilize deferred tax assets.
 
New Accounting Pronouncements
 
For information related to recent accounting
pronouncements, see Note 1 of the Notes to the Consolidated Financial Statements.

 34



Item 7A.Quantitative and Qualitative Disclosures About Market Risk
 
We are exposed to the impact of market fluctuations
associated with commodity prices as discussed below.
 
Commodity Price Risk
 
We manage a portion of our risk with respect to
the volatility of commodity prices inherent in the ethanol industry by using forward purchase and sale contracts. At January 31, 2024,
One Earth and NuGen combined had purchase commitments for approximately 17.4 million bushels of corn, the principal raw material for their
ethanol plants. At January 31, 2024, One Earth and NuGen combined had purchase commitments for approximately 1.9 million MmBtu of natural
gas. At January 31, 2024, One Earth and NuGen had combined sales commitments for approximately 52.7 million gallons of ethanol, 120,000
tons of distillers grains and 14.9 million pounds of distillers corn oil. Not all of our commitments are at fixed price. Our exposures
to market risk, which include the impact of our risk management activities, are based on the estimated effect on pre-tax income starting
on January 31, 2024, are as follows (amounts in thousands):
 


Commodity 
Estimated
    Total Volume for the Next 12 Months 
Unit of Measure 
Decrease in Pre-tax  Income From a 10%  Adverse Change in Price

  
  
  
 
   

Ethanol 
289,000 
Gallons 
        
$42,203 

Corn 
100,000 
Bushels 
 
$42,793 

Distillers Grains 
700 
Tons 
 
$11,042 

Distillers Corn Oil 
92,000 
Pounds 
 
$3,858 

Natural Gas 
7,400 
MmBtu 
 
$2,010 


 35


Item 8. Financial Statements and
Supplementary Data
REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands)
 


  
January 31, 

ASSETS 
2024  
2023 

CURRENT ASSETS: 
   
  

Cash and cash equivalents 
$223,397  
$69,612 

Short-term investments 
 155,260  
 211,331 

Restricted cash 
 -  
 1,735 

Accounts receivable 
 23,185  
 25,162 

Inventory 
 26,984  
 48,744 

Refundable income taxes 
 5,728  
 2,962 

Prepaid expenses and other 
 17,549  
 13,098 

Total current assets 
 452,103  
 372,644 

Property and equipment - net 
 155,587  
 135,497 

Operating lease right-of-use assets 
 13,038  
 15,214 

Other assets 
 9,138  
 23,179 

Equity method investments 
 34,936  
 33,045 

TOTAL ASSETS 
$664,802  
$579,579 

  
    
   

LIABILITIES AND EQUITY  
    
   

CURRENT LIABILITIES: 
    
   

Accounts payable – trade (includes $5.8 million and $1.5 million with related parties at January 31, 2024 and 2023, respectively) 
$42,073  
$34,091 

Current operating lease liabilities 
 4,469  
 5,180 

Accrued expenses and other current liabilities 
 19,717  
 15,328 

Total current liabilities 
 66,259  
 54,599 

LONG-TERM LIABILITIES: 
    
   

Deferred taxes 
 1,598  
 1,097 

Long-term operating lease liabilities 
 8,378  
 9,855 

Other long-term liabilities 
 970  
 3,034 

Total long-term liabilities 
 10,946  
 13,986 

COMMITMENTS AND CONTINGENCIES (Notes 11 and 13) 
    
   

EQUITY: 
    
   

REX shareholders’ equity: 
    
   

Common stock, $0.01 par value; 45,000 shares authorized; 29,853 shares issued 
 299  
 299 

Paid in capital 
 3,769  
 578 

Retained earnings 
 701,761  
 640,826 

Treasury stock, 12,350 and 12,463 shares, respectively 
 (191,911) 
 (193,721)

Total REX shareholders’ equity 
 513,918  
 447,982 

Noncontrolling interests 
 73,679  
 63,012 

Total equity 
 587,597  
 510,994 

TOTAL LIABILITIES AND EQUITY 
$664,802  
$579,579 

 
See notes to consolidated financial statements.

 36


REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands, Except Per Share Amounts)
 


  
Years Ended January 31, 

  
2024  
2023  
2022 

Net sales and revenue 
$833,384  
$855,000  
$774,802 

Cost of sales (includes $117.0 million, $135.4 million and $90.2 million with related parties for the years ended January 31, 2024, 2023 and 2022, respectively) 
 735,166  
 806,398  
 684,173 

  
    
    
   

Gross profit 
 98,218  
 48,602  
 90,629 

  
    
    
   

Selling, general and administrative expenses 
 (29,379) 
 (22,827) 
 (21,545)

Equity in income of unconsolidated affiliates 
 13,921  
 8,745  
 6,624 

Interest and other income, net 
 15,724  
 12,959  
 130 

  
    
    
   

Income before income taxes 
 98,484  
 47,479  
 75,838 

Provision for income taxes 
 (22,560) 
 (9,542) 
 (19,031)

  
    
    
   

Net income from continuing operations 
 75,924  
 37,937  
 56,807 

Net income attributable to noncontrolling interests (continuing operations) 
 (14,989) 
 (10,240) 
 (9,235)

Net income attributable to REX common shareholders (continuing operations) 
 60,935  
 27,697  
 47,572 

  
    
    
   

Net income from discontinued operations, net of tax (includes expense of $0.3 million with related parties for the year ended January 31, 2022) 
 -  
 -  
 4,395 

Net loss attributable to noncontrolling interests (discontinued operations) 
 -  
 -  
 397 

Net income attributable to REX common shareholders (discontinued operations) 
 -  
 -  
 4,792 

  
    
    
   

Net income attributable to REX common shareholders 
$60,935  
$27,697  
$52,364 

  
    
    
   

  
    
    
   

Weighted average shares outstanding – basic 
 17,482  
 17,638  
 17,946 

  
    
    
   

Basic net income per share from continuing operations attributable to REX common shareholders 
$3.49  
$1.57  
$2.65 

Basic net income per share from discontinued operations attributable to REX common shareholders 
 -  
 -  
 0.27 

Basic net income per share attributable to REX common shareholders 
$3.49  
$1.57  
$2.92 

  
    
    
   

Weighted average shares outstanding – diluted 
 17,576  
 17,638  
 17,946 

  
    
    
   

Diluted net income per share from continuing operations attributable to REX common shareholders 
$3.47  
$1.57  
$2.65 

Diluted net income per share from discontinued operations attributable to REX common shareholders 
 -  
 -  
 0.27 

Diluted net income per share attributable to REX common shareholders 
$3.47  
$1.57  
$2.92 

 
See notes to consolidated financial statements.

 37



REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
FOR THE YEARS ENDED JANUARY 31, 2024, 2023 AND 2022
(Amounts in Thousands)
 


  
REX Shareholders 
   
  

  
   
   
   
   
   
  

  
Common Shares Issued  
Treasury  
Paid-in  
Retained  
Noncontrolling  
Total 

  
Shares  
Amount  
Shares  
Amount  
Capital  
Earnings  
Interest  
Equity 

Balance at January 31, 2021 
 29,853  
$299  
 11,877  
$(174,535) 
$-  
$559,019  
$52,400  
$437,183 

  
    
    
    
    
    
    
    
   

Net income 
    
    
    
    
    
 52,364  
 8,838  
 61,202 

  
    
    
    
    
    
    
    
   

Capital contributions 
    
    
    
    
    
    
 304  
 304 

  
    
    
    
    
    
    
    
   

Treasury stock acquired  
    
    
 252  
 (6,627) 
    
    
    
 (6,627)

  
    
    
    
    
    
    
    
   

Noncontrolling interests distribution and other 
    
    
    
    
    
    
 (4,772) 
 (4,772)

  
    
    
    
    
    
    
    
   

Issuance of equity awards and stock based compensation expense 
 -  
 -  
 (37) 
 48  
 -  
 224  
 -  
 272 

  
    
    
    
    
    
    
    
   

Balance at January 31, 2022 
 29,853  
 299  
 12,092  
 (181,114) 
 -  
 611,607  
 56,770  
 487,562 

  
    
    
    
    
    
    
    
   

Net income 
    
    
    
    
    
 27,697  
 10,240  
 37,937 

  
    
    
    
    
    
    
    
   

Treasury stock acquired  
    
    
 472  
 (13,012) 
    
    
    
 (13,012)

  
    
    
    
    
    
    
    
   

Noncontrolling interests distribution and other 
    
    
    
    
    
    
 (3,998) 
 (3,998)

  
    
    
    
    
    
    
    
   

Issuance of equity awards and stock based compensation expense 
 -  
 -  
 (101) 
 405  
 578  
 1,522  
 -  
 2,505 

  
    
    
    
    
    
    
    
   

Balance at January 31, 2023 
 29,853  
 299  
 12,463  
 (193,721) 
 578  
 640,826  
 63,012  
 510,994 

  
    
    
    
    
    
    
    
   

Net income 
    
    
    
    
    
 60,935  
 14,989  
 75,924 

  
    
    
    
    
    
    
    
   

Capital contributions 
    
    
    
    
    
    
 22  
 22 

  
    
    
    
    
    
    
    
   

Noncontrolling interests distribution and other 
    
    
    
    
    
    
 (4,344) 
 (4,344)

  
    
    
    
    
    
    
    
   

Issuance of equity awards and stock based compensation expense 
 -  
 -  
 (113) 
 1,810  
 3,191  
 -  
 -  
 5,001 

  
    
    
    
    
    
    
    
   

Balance at January 31, 2024 
 29,853  
$299  
 12,350  
$(191,911) 
$3,769  
$701,761  
$73,679  
$587,597 

 
See notes to consolidated financial statements.

 38


REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands) 
 


  
Years Ended January 31, 

  
2024  
2023  
2022 

CASH FLOWS FROM OPERATING ACTIVITIES: 
   
   
  

Net income including noncontrolling interests 
$75,924  
$37,937  
$61,202 

Net income from discontinued operations, net of tax 
 -  
 -  
 4,395 

Net income from continuing operations 
 75,924  
 37,937  
 56,807 

Adjustments to reconcile net income to net cash provided by operating activities:  
    
    
   

Depreciation 
 17,794  
 17,976  
 18,031 

Amortization of operating lease right-of-use assets 
 5,245  
 5,328  
 5,560 

Stock based compensation expense 
 6,209  
 1,930  
 1,753 

Income from equity method investments 
 (13,921)  
 (8,745) 
 (6,624)

Dividends received from equity method investments 
 12,030  
 6,266  
 5,514 

Interest income from investments 
 (10,008) 
 (2,839) 
 (43)

Loss (gain) on disposal of real estate and property and equipment 
 243  
 (102) 
 30 

Deferred income tax 
 14,627  
 915  
 12,730 

Changes in assets and liabilities: 
    
    
   

Accounts receivable 
 1,977  
 659  
 (6,108)

Inventory 
 21,760  
 (6,519) 
 (4,799)

Prepaid expenses and other assets 
 (4,495) 
 (452) 
 199 

Income taxes refundable 
 (2,766) 
 3,715  
 (1,103)

Accounts payable – trade 
 7,868  
 1,478  
 16,005 

Accrued expenses and other liabilities 
 (4,517) 
 (2,752) 
 475 

 Net cash provided by operating activities from continuing operations 
 127,970  
 54,795  
 98,427 

 Net cash used in operating activities from discontinued operations 
 -  
 -  
 (6,716)

 Net cash provided by operating activities 
 127,970  
 54,795  
 91,711 

CASH FLOWS FROM INVESTING ACTIVITIES: 
    
    
   

Capital expenditures 
 (37,663) 
 (15,578) 
 (5,126)

Purchases of short-term investments 
 (448,507) 
 (399,350) 
 (88,949)

Maturities of short-term investments 
 514,586  
 216,735  
 99,309 

Proceeds from sale of real estate and property and equipment 
 29  
 5  
 60 

Deposits 
 (43) 
 (319) 
 - 

 Net cash provided by (used in) investing activities 
 28,402  
 (198,507) 
 5,294 

CASH FLOWS FROM FINANCING ACTIVITIES: 
    
    
   

Treasury stock acquired 
 -  
 (13,012) 
 (6,627)

Capital contributions from minority investor 
 22  
 -  
 - 

Payments to noncontrolling interests holders 
 (4,344) 
 (3,997) 
 (4,772)

 Net cash used in financing activities from continuing operations 
 (4,322) 
 (17,009) 
 (11,399)

 Net cash provided by financing activities from discontinued operations 
 -  
 -  
 304 

 Net cash used in financing activities 
 (4,322) 
 (17,009) 
 (11,095)

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND
    RESTRICTED CASH 
 152,050  
 (160,721) 
 85,910 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH-Beginning of year 
 71,347  
 232,068  
 146,158 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH-End of year 
$223,397  
$71,347  
$232,068 

 
Continued on the following page

 39


REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands) 
 


Continued from the previous page 
   
   
  

  
   
   
  

Non cash financing activities-Stock awards issued 
$965  
$1,539  
$100 

Non cash financing activities-Stock awards accrued 
$2,172  
$965  
$1,580 

Non cash investing activities-Accrued capital expenditures 
$918  
$425  
$78 

Right-of-use assets acquired and liabilities incurred upon lease execution 
$3,210  
$9,321  
$4,103 

  
    
    
   

Reconciliation of total cash, cash equivalents and restricted cash: 
    
    
   

Cash and cash equivalents 
$223,397  
$69,612  
$229,846 

Restricted cash 
 -  
 1,735  
 2,222 

Total cash, cash equivalents and restricted cash 
$223,397  
$71,347  
$232,068 

 
See notes to consolidated financial statements.

 40


REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 

1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Principles of Consolidation
– The accompanying financial statements consolidate the operating results and financial position of REX American
Resources Corporation and its wholly-owned and majority owned subsidiaries (the “Company” or “REX”). All
intercompany balances and transactions have been eliminated. As of January 31, 2024, the Company owns interests in three operating
entities – two are consolidated and one is accounted for using the equity method of accounting. The results of One Earth
are included on a delayed basis of one month lag as One Earth has a fiscal year end of December 31. The other consolidated entity
has the same fiscal year end as the parent company.
 
Stock Split
– On June 21, 2022, the Board of Directors of the Company adopted resolutions declaring a three-for-one split of the
Company’s Common Stock to be effectuated in the form of a 200% stock dividend, payable on August 5, 2022 to stockholders
of record at the close of business on July 29, 2022. The stock split has been retroactively reflected in the accompanying consolidated
financial statements.
 
Fiscal Year – All
references in these consolidated financial statements to a particular fiscal year are to the Company’s fiscal year ended
January 31. The Company refers to its fiscal year by reference to the year immediately preceding the January 31 fiscal year
end date. For example, “fiscal year 2023” means the period February 1, 2023 to January 31, 2024.
 
Segments –
Beginning in the third quarter of 2021, the Company has one reportable segment, ethanol and by-products. Within the ethanol and
by-products segment, the Company has equity investments in three ethanol limited liability companies, two of which are majority
ownership interests. Prior period amounts have been reclassified to conform to current segment reporting.
 
In applying the criteria set
forth in ASC 280, Segment Reporting, the Company determined that based on the nature of the products and production process
and the expected financial results, the Company’s operations at its ethanol plants are aggregated into one reporting segment.
 
Use of Estimates –
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could differ from those estimates.
 
Cash Equivalents –
Cash equivalents are principally short-term investments with original maturities of three months or less. The carrying
amount of cash equivalents approximates fair value.
 
Concentrations of Risk
–The Company maintains cash and cash equivalents in accounts with financial institutions which exceed federally
insured limits. The Company has not experienced any losses in such accounts. The Company does not believe there is significant
credit risk related to its cash and cash equivalents.
 
The Company sells its products
to a limited number of larger commercial buyers, which may increase the chance of loss due to non-performance by a counterparty.
Nine (fiscal year 2023), eight (fiscal year

 41


2022), and nine (fiscal year
2021) customers accounted for approximately 92%, 90%, and 85% of the Company’s net sales and revenue during fiscal years
2023, 2022, and 2021, respectively. At January 31, 2024 and 2023, six and four customers represented approximately 93% and 81%,
respectively, of the Company’s accounts receivable balance. The Company has not experienced any significant losses in such
accounts.
 
Trade Receivables —
Trade receivables are recorded at their estimated net realizable value. Accounts are considered past due if payment is
not received on a timely basis in accordance with the Company’s credit terms. Accounts considered uncollectible are written
off in the period they are determined to be uncollectible. As of January 31, 2024 and 2023, the Company believes that all
amounts are collectible and an allowance for credit losses was not considered necessary.
 
Inventory –
Inventories are carried at the lower of cost or net realizable value. Cost for all inventories is determined using the first-in,
first-out method. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonable predictable
costs of completion, disposal and transportation. Inventory includes direct production costs and certain overhead costs such as
depreciation, property taxes and utilities related to producing ethanol and related by-product. Inventory is permanently written
down for instances when cost exceeds estimated net realizable value; such write-downs are based primarily upon commodity prices
as the market value of inventory is often dependent upon changes in commodity prices. The Company recorded approximately $0.8 million
and $0.7 million of inventory write-downs in cost of sales at January 31, 2024 and January 31, 2023, respectively. Fluctuations
in the write-down of inventory generally relate to the levels and composition of such inventory at a given point in time and commodity
prices. The components of inventory are as follows (amounts in thousands):
 


  
January 31, 

  
2024  
2023 

  
    
   

Ethanol and other finished goods 
$9,102  
$12,695 

Work in process 
 5,299  
 10,194 

Grain and other raw materials 
 12,583  
 25,855 

  
    
   

Total 
$26,984  
$48,744 

 
Property and Equipment
– Property and equipment is recorded at cost or the fair value on the date of acquisition (for property and equipment
acquired in a business combination). Depreciation is computed using the straight-line method. Estimated useful lives are 15 to
40 years for buildings and improvements, and 3 to 20 years for machinery, fixtures and equipment.

 42


The components of property
and equipment are as follows (amounts in thousands):
 


  
January 31, 

  
2024  
2023 

  
    
   

Land and improvements 
$32,403  
$30,194 

Buildings and improvements 
 23,810  
 23,707 

Machinery, equipment and fixtures 
 307,326  
 299,665 

Construction in progress 
 37,334  
 10,255 

  
    
   

  
 400,873  
 363,821 

Less: accumulated depreciation 
 (245,286) 
 (228,324)

  
    
   

Total 
$155,587  
$135,497 

 
Impairment of Long-Lived
Assets
 
In accordance with ASC 360-05,
Impairment or Disposal of Long-Lived Assets, the Company reviews its long-lived assets, consisting of property and equipment,
equity method investments and operating lease right-of-use assets, for impairment whenever events or changes in circumstances indicate
the carrying amount of the asset may not be recoverable. The Company assesses long-lived assets for impairment by first determining
the forecasted, undiscounted cash flows the asset group is expected to generate. If this total is less than the carrying value
of the asset, the Company will then determine the fair value of the asset group. An impairment loss would be recognized in the
amount by which the carrying amount of the asset exceeded the fair value of the asset. Significant management judgement is required
to determine the fair value of long-lived assets, which includes discounted cash flows. Such estimates could be significantly affected
by future changes in market conditions. The Company recorded no impairment charges in fiscal years 2023, 2022, and 2021.
 
Depreciation expense was approximately
$17.8 million, $18.0 million, and $18.0 million in fiscal years 2023, 2022, and 2021, respectively.
 
Investments – The
method of accounting applied to long-term investments, whether consolidated, equity or cost, involves an evaluation of the significant
terms of each investment that explicitly grant or suggest evidence of control or influence over the operations of the investee
and also includes the identification of any variable interests in which the Company is the primary beneficiary. The Company accounts
for investments in limited liability companies in which it may have a less than 20% ownership interest, using the equity method
of accounting when the factors discussed in ASC 323, Investments-Equity Method and Joint Ventures (“ASC 323”),
are met. The excess of the carrying value over the underlying equity in the net assets of equity method investees is allocated
to specific assets and liabilities. Investments in businesses that the Company does not control but for which it has the ability
to exercise significant influence over operating and financial matters are accounted for using the equity method. The Company accounts
for its investment in Big River using the equity method of accounting and includes the results of Big River on a delayed basis
of one month as it has a fiscal year end of December 31.
 
The Company periodically evaluates
its investments for impairment due to declines in market value considered to be other than temporary. Such impairment evaluations
include, in addition to persistent, declining market prices, general economic and company-specific evaluations. If the Company
determines that a decline in market value is other than temporary, then a charge to earnings is recorded in the Consolidated Statements
of Operations and a new cost basis in the investment is established.

 43


Short-term investments, consisting of U.S. government
obligations, are considered held-to-maturity, and therefore are carried at amortized historical cost.
 
Revenue Recognition
– The Company recognizes sales of ethanol, distillers grains and distillers corn oil when obligations under the terms of
the respective contracts with customers are satisfied; this occurs with the transfer of control of products, generally upon shipment
from the ethanol plant or upon loading of the rail car used to transport the products.
 
Cost of Sales –
Cost of sales includes depreciation, costs of raw materials, third-party freight charges, purchasing and receiving costs,
inspection costs, other distribution expenses, warehousing costs, plant repair and maintenance costs, plant management, certain
compensation costs and general facility overhead charges.
 
SG&A Expenses –
The Company includes non-production related costs such as professional fees, selling charges, operating lease expense,
and certain payroll in SG&A expenses.
 
Change in Accounting
Principles– Effective during fiscal year 2023, the Company changed
the method of accounting for shipping and handling costs for products sold to customers from recorded within “Selling, general
and administrative expenses” to recorded within “Cost of sales” on the accompanying Consolidated Statements of
Operations. While both presentations are allowable under accounting principles generally accepted in the United States of America,
the Company believes that this change in classification is preferable because it improves the comparability of gross margin between
periods and among industry peers.
 
The following tables show the
effect of the retrospective change to the Consolidated Statements of Operations previously presented:
 


 
 
Year Ended
January 31, 2023

 
 
 
 
 
 
 

 
 
As Previously
Reported
 
 
Effect of
Change
 
 
As Currently
Reported
 

 
 
 
 
 
 
 

Cost of sales
 
$
800,269
 
 
$
6,129
 
 
$
806,398
 

 
 
 
 
 
 
 

Gross profit
 
$
54,731
 
 
$
(6,129)
 
 
$
48,602
 

 
 
 
 
 
 
 

Selling, general and administrative
 
$
(28,956)
 
 
$
6,129
 
 
$
(22,827)
 


 44




 
 
Year
    Ended
    January 31, 2022

 
 
 
 
 
 
 

 
 
As Previously
Reported
 
 
Effect of
Change
 
 
As Currently
Reported
 

 
 
 
 
 
 
 

Cost of sales
 
$
677,242
 
 
$
6,931
 
 
$
684,173
 

 
 
 
 
 
 
 

Gross profit
 
$
97,560
 
 
$
(6,931)
 
 
$
90,629
 

 
 
 
 
 
 
 

Selling, general and administrative
 
$
(28,476)
 
 
$
6,931
 
 
$
(21,545)
 

 
Financial Instruments
– Certain of the forward corn purchase and ethanol, distillers grains and distillers corn oil sale contracts are accounted
for under the “normal purchases and normal sales” scope exemption of ASC 815, Derivatives and Hedging (“ASC
815”), because these arrangements are for purchases of grain that will be delivered in quantities expected to be used
and sales of ethanol, distillers grains and distillers corn oil that will be produced in quantities expected to be sold by us over
a reasonable period of time in the normal course of business. During fiscal years 2023, 2022, and 2021 there were no material settlements
of forward contracts that were recorded at fair value. The Company recorded an asset and liability of $0.6 million and $0.8 million,
respectively, associated with contracts not accounted for under the “normal purchases and normal sales” scope exception
of ASC 815 at January 31, 2024. The Company recorded an asset and liability of $0.1 million and $0.4 million, respectively, associated
with contracts not accounted for under the “normal purchases and normal sales” scope exception of ASC 815 at January
31, 2023.
 
The Company uses derivative
financial instruments (exchange-traded futures contracts and swaps) to manage a portion of the risk associated with changes in
commodity prices, primarily related to corn and ethanol. The Company monitors and manages this exposure as part of its overall
risk management policy. As such, the Company seeks to reduce the potentially adverse effects that the volatility of these markets
may have on its operating results. The Company may take hedging positions in these commodities as one way to mitigate risk. While
the Company attempts to link its hedging activities to purchase and sale activities, there are situations in which these hedging
activities can themselves result in losses. The Company does not hold or issue derivative financial instruments for trading or
speculative purposes. The changes in fair value of these derivative financial instruments are recognized in current period earnings
as the Company does not use hedge accounting.
 
Stock Compensation –
The Company has a stock-based compensation plan, approved by its shareholders, which reserved a total of 1,650,000 shares of common
stock for issuance pursuant to its terms. The plan provides for the granting of shares of stock, including options to purchase
shares of common stock, stock appreciation rights tied to the value of common stock, restricted stock, and restricted stock unit
awards to eligible employees, non-employee directors and consultants. The Company measures share-based compensation grants at fair
value on the grant date, adjusted for estimated forfeitures. The Company records noncash compensation expense related to equity
and liability awards in its consolidated financial statements over the requisite service period on a straight-line basis. See Note
10 for a further discussion of restricted stock.
 
Other Income –
As part of the Coronavirus Aid, Relief, and Economic Security Act, passed in
2020, $700 million in funds were made available to the U.S. Department of Agriculture to distribute to impacted producers of ethanol,
biodiesel, and other renewable fuels under the Biofuel Producer Program. The U.S. 

 45


Department
of Agriculture (“USDA”) distributed funds to applicants in May 2022. Our consolidated plants received a total of approximately
$1.0 million and $7.8 million from this program in fiscal years 2023 and 2022, respectively, which was recorded within “Interest
and other income, net” in the Consolidated Statements of Operations. The Company has no further reporting or other obligations
related to the receipt of these funds.
 
Income Taxes
– The Company provides for deferred tax liabilities and assets for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating
loss and tax credit carryforwards. The Company provides for a valuation allowance if, based on the weight of available positive
and negative evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
 
Comprehensive Income
– The Company has no components of other comprehensive income, and therefore, comprehensive income equals net income.
 
New Accounting Pronouncements
– In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update
(“ASU”) 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosure”, which
improves reportable segment disclosure requirements through enhanced disclosure about significant segment expenses. This ASU is
effective for public entities that are required to report segment information in accordance with Topic 280 for fiscal years beginning
after December 15, 2023, and interim periods within fiscal years beginning December 15, 2024. Early adoption is permitted. The
Company is currently evaluating the impact of this ASU.
 
In December 2023, the FASB issued
ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”, to enhance the transparency and decision
usefulness of income tax disclosures. This ASU is effective for all entities that are subject to Topic 740 for fiscal years beginning
after December 15, 2024. Early adoption and retrospective application are permitted, but not required. The Company is currently
evaluating the impact of this ASU.
 

2.NET SALES AND REVENUE
 
The Company recognizes sales
of products when obligations under the terms of the respective contracts with customers are satisfied. This occurs with the transfer
of control of products, generally upon shipment from the ethanol plant or upon loading of the rail car used to transport the products.
Revenue is measured as the amount of consideration expected to be received in exchange for transferring goods. Sales, value added
and other taxes the Company collects concurrent with revenue producing activities are excluded from net sales and revenue.
 
The majority of the Company’s
sales have payment terms ranging from 5 to 10 days after transfer of control. The Company has determined that sales contracts do
not generally include a significant financing component. The Company has not historically, and does not intend to, enter sales
contracts in which payment is due from a customer prior to transferring product to the customer. Thus, the Company does not record
unearned revenue.

 46


The following table shows disaggregated
revenue by product (amounts in thousands):
 


  
Fiscal Year 

  
2023  
2022  
2021 

  
   
   
  

Sales
    of products, continuing operations: 
    
    
   

  
    
    
   

Ethanol 
$635,420  
$649,501  
$613,597 

Dried distillers grains 
 139,173  
 139,118  
 125,009 

Distillers corn oil 
 52,935  
 55,595  
 38,852 

Modified distillers grains 
 5,584  
 11,579  
 9,104 

Derivative financial instruments
    losses 
 (37)  
 (1,024)  
 (12,109) 

Other 
 309  
 231  
 349 

Total
    sales 
$833,384  
$855,000  
$774,802 

  
    
    
   

Sales
    of products, discontinued operations: 
    
    
   

  
    
    
   

Refined
    coal1 
$—  
$—  
$400 

 
1 Refined coal sales were recorded net of
the cost of coal as the Company purchased the coal feedstock from the same customer to which the processed refined coal was sold.
 

3.INVESTMENTS
 
Equity Method Investment
in Big River
 
The Company’s equity method
investment in Big River is accounted for under ASC 323. The following table summarizes the investment (amounts in thousands):
 


  
January 31, 

  
2024  
2023 

  
    
   

Carrying amount 
$34,936  
$33,045 

  
    
   

Ownership percentage 
 10.3%  
 10.3% 

 
The Company invested approximately
$20.0 million in Big River which is a holding company for several entities. Big River, through its various entities (both wholly
and partially owned), operates four ethanol manufacturing facilities, that combined shipped approximately 430.0 million gallons
of ethanol in the twelve months ended January 31, 2024. The Company recorded income of approximately $13.9 million, $8.7 million,
and $6.6 million as its share of earnings from Big River during fiscal years 2023, 2022, and 2021, respectively. The Company received
dividends of approximately $12.0 million, $6.3 million, and $5.5 million from Big River during fiscal years 2023, 2022, and 2021,
respectively. At January 31, 2024, the carrying value of the investment in Big River was approximately $34.9 million; the amount
of underlying equity in the net assets of Big River was approximately $36.6 million.

 47


Summarized financial information
for the Company’s equity method investee as of and for its fiscal year end is presented in the following tables (amounts
in thousands):
 


  
December 31, 

  
2023  
2022 

  
    
   

Current assets 
$351,278  
$319,367 

Non current assets 
 144,933  
 151,039 

Total assets 
$496,211  
$470,406 

  
    
   

Current liabilities 
$98,187  
$118,946 

Long-term liabilities 
 7,559  
 8,686 

Total liabilities 
$105,746  
$127,632 

  
    
   

Members’ capital 
$355,385  
$305,447 

Noncontrolling interests 
 35,080  
 37,326 

Total members’ equity 
$390,465  
$342,773 



  
  

  
Years Ended December 31, 

  
2023  
2022  
2021 

  
    
    
   

Net sales and revenue 
$1,379,651  
$1,509,406  
$1,332,555 

Gross profit 
$160,549  
$94,106  
$85,401 

Depreciation expense 
$26,142  
$27,752  
$34,258 

Income from continuing operations 
$135,012  
$84,814  
$64,243 

Net income 
$135,012  
$84,814  
$64,243 

 
Big River has debt agreements
that limit and restrict amounts the entity can pay in the form of dividends or advances to owners. The restricted net assets of
Big River at January 31, 2024 are approximately $110.3 million; the Company’s proportionate share of restricted net assets
of Big River is approximately $11.4 million.
 
Short-term Investments
 
At January 31, 2024, the Company
owned United States Treasury Bills (classified as short-term investments) that had an amortized cost, or carrying value, of approximately
$155.3 million, which materially approximates fair value. The contractual maturity of these investments was less than one year.
The yield to maturity rate was approximately 5.5%. As carrying value materially approximates fair value, unrecognized holding gains
or losses were insignificant.
 
At January 31, 2023, the Company
owned United States Treasury Bills (classified as short-term investments) that had an amortized cost, or carrying value, of approximately
$211.3 million, which materially approximates fair value. The contractual maturity of these investments was less than one year.
The yield to maturity rate was approximately 3.9%. As carrying value materially approximates fair value, unrecognized holding gains
or losses were insignificant.

 48



4.FAIR VALUE
 
The Company applies ASC 820,
“Fair Value Measurements and Disclosures” (“ASC 820”) which defines fair value as the exchange price
that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market
for the asset or liability in an orderly transaction between market participants on the measurement date.
 
The Company determines the
fair market values of its financial instruments based on the fair value hierarchy established by ASC 820, which requires an entity
to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes
three levels of inputs that may be used to measure fair values which are provided below. The Company carries certain cash equivalents,
investments and derivative financial instruments at fair value.
 
Level 1
– Quoted prices in active markets for identical assets or liabilities. Level 1 assets and liabilities include derivative
contracts that are traded in an active exchange market.
 
Level 2
– Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets
that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the
full term of the assets or liabilities. Level 2 assets and liabilities include derivative contracts whose value is determined using
a pricing model with inputs that are observable in the market or can be derived principally or corroborated by observable market
data.
 
Level 3
– Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the
assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models,
discounted cash flow methods, or similar techniques, as well as instruments for which the determination of fair value requires
significant management judgment or estimation. Unobservable inputs are developed based on the best information available, which
may include the Company’s own data.
 
The fair values of derivative
assets and liabilities traded in the over-the-counter market are determined using quantitative models that require the use of multiple
market inputs including interest rates, prices and indices to generate pricing and volatility factors, which are used to value
the position. The predominance of market inputs are actively quoted and can be validated through external sources, including brokers,
market transactions and third-party pricing services. Estimation risk is greater for derivative asset and liability positions that
are either option-based or have longer maturity dates where observable market inputs are less readily available or are unobservable,
in which case interest rate, price or index scenarios are extrapolated in order to determine the fair value. The fair values of
derivative assets and liabilities include adjustments for market liquidity, counterparty credit quality, the Company’s own
credit standing and other specific factors, where appropriate. The fair values of property and equipment are determined by using
various models that discount future expected cash flows.
 
To ensure the prudent application
of estimates and management judgment in determining the fair value of derivative assets and liabilities and property and equipment,
various processes and controls have been adopted, which include: (i) model validation that requires a review and approval for pricing,
financial statement fair value determination and risk quantification; and (ii) periodic review and substantiation of profit and
loss reporting for all derivative instruments.

 49


Financial assets and liabilities
measured at fair value at January 31, 2024 on a recurring basis are summarized below (amounts in thousands):
 


  
Level
    1  
Level
    2  
Level
    3  
Total Fair

    Value 

Forward
    purchase contracts asset  (1) 
$-  
$579  
$-  
$579 

  
    
    
    
   

Forward purchase
    contracts liability  (4) 
$-  
$802  
$-  
$802 

Commodity
    futures – in a loss position(2) 
 297  
 -  
 -  
 297 

Total
    liabilities 
$297  
$802  
$-  
$1,099 

 
Financial assets and liabilities measured at fair
value at January 31, 2023 on a recurring basis are summarized below (amounts in thousands):
 


  
Level 1  
Level 2  
Level 3  
Total Fair
 Value 

Forward
    purchase contracts asset  (1) 
$-  
$105  
$-  
$105 

Commodity
    futures – in a gain position (3) 
 80  
 -  
 -  
 80 

Total
    assets 
$80  
$105  
$-  
$185 

  
    
    
    
   

Forward purchase
    contracts liability  (4) 
$-  
$355  
$-  
$355 

Commodity
    futures – in a loss position(5) 
 67  
 -  
 -  
 67 

Total
    liabilities 
$67  
$355  
$-  
$422 

  
    
    
    
   


(1)The forward purchase contracts asset is included in “Prepaid expenses and other” on the accompanying Consolidated Balance Sheets.
 

(2) The commodity futures liability is netted with cash collateral due from broker and included in “Prepaid expense and other” on the accompanying Consolidated Balance Sheets.
 

(3)   The commodity futures asset is included in “Prepaid expenses and other” on the accompanying Consolidated Balance Sheets.
 

(4)The forward purchase contracts liability is included in “Accrued
expenses and other current liabilities” on the accompanying Consolidated Balance Sheets.
 

(5)The commodity futures asset is included in “Accrued expenses
and other current liabilities” on the accompanying Consolidated Balance Sheets.
 

No other financial instruments were elected to be measured at
fair value in accordance with ASC 470-20-25-21. The carrying value of all other financial assets and liabilities approximate fair
value.
 
There were no assets measured at fair value at January 31, 2024 and 2023 on a non-recurring basis.

 50



5.OTHER
                                            ASSETS
 
The components of other noncurrent assets are as
follows (amounts in thousands):
 


 
  
January 31, 

 
  
2024  
2023 

 
  
    
   

 
Deferred taxes 
$7,837  
$21,964 

 
Other 
 1,301  
 1,215 

 
  
    
   

 
Total 
$9,138  
$23,179 

 

6.ACCRUED
                                            EXPENSES AND OTHER CURRENT LIABILITIES
 
The components of accrued expenses and other current
liabilities are as follows (amounts in thousands):
 


 
  
January 31, 

 
  
2024  
2023 

 
  
    
   

 
Accrued payroll and related items 
$9,457  
$4,428 

 
Accrued utility charges 
 3,373  
 4,116 

 
Accrued transportation related items 
 2,972  
 1,311 

 
Commodity futures 
 -  
 67 

 
Forward purchase contracts 
 802  
 355 

 
Accrued real estate taxes 
 1,742  
 1,850 

 
Accrued income taxes 
 -  
 2,049 

 
Other 
 1,371  
 1,152 

 
  
    
   

 
Total 
$19,717  
$15,328 

 

7.LEASES
 
The Company elected the practical
expedient, available pursuant to ASC 842, Leases, for lessees to include both lease and non-lease components as a single
component and account for it as a lease. In general, certain maintenance costs are the responsibility of the Company under its
railcar leases. These maintenance costs are a non-lease component which the Company elected to combine with rental payments and
account for the total amount as operating lease expense.
 
At January 31, 2024, the Company
has lease agreements, as lessee, for railcars. All the leases are accounted for as operating leases. The lease agreements do not
contain a specified implicit interest rate; therefore, the Company’s estimated incremental borrowing rate was used to determine
the present value of future minimum lease payments. The lease term for all the Company’s leases includes the noncancelable period
of the lease and any periods covered by renewal options that the Company is reasonably certain to exercise. Certain leases include
rent escalations pre-set in the agreements, which are factored into the lease payment stream.

 51


For fiscal years 2023, 2022,
and 2021, the components of lease expense, classified as SG&A expenses on the Consolidated Statement of Operations are as follows
(amounts in thousands):
 


 
  
Fiscal Year 

 
  
2023  
2022  
2021 

 
  
    
    
   

 
Operating lease expense 
$6,386  
$7,360  
$6,346 

 
Variable lease expense 
 301  
 399  
 1,907 

 
Total lease expense 
$6,687  
$7,759  
$8,253 

 
The following table is a summary
of future minimum rentals on such leases at January 31, 2024 (amounts in thousands):
 


 
Years Ended January 31, 
Minimum
Rentals 

 
  
   

 
2025 
$5,137 

 
2026 
 2,985 

 
2027 
 2,935 

 
2028 
 2,506 

 
2029 
 1,178 

 
Total 
 14,741 

 
Less: present value discount 
 1,894 

 
Operating lease liabilities 
$12,847 

 
At January 31, 2024, the weighted
average remaining lease term was 3.4 years, and the weighted average discount rate was 5.94% for the above leases.
 
At January 31, 2023, the weighted
average remaining lease term was 3.7 years, and the weighted average discount rate was 5.51%.
 

8.COMMON
                                            STOCK
 
On June 21, 2022, the Board
of Directors of the Company adopted resolutions declaring a three-for-one split of the Company’s Common Stock to be effectuated
in the form of a 200% stock dividend, payable on August 5, 2022 to stockholders of record at the close of business on July 29,
2022. The stock split has been retroactively reflected in the accompanying consolidated financial statements.
 
The Company did not purchase
any shares of its common stock during fiscal year 2023. During fiscal years 2022 and 2021 the Company purchased approximately 472,000
shares and 252,000 shares of its common stock for approximately $13.0 million and $6.6 million, respectively. At January 31, 2024,
the Company had prior authorization by its Board of Directors to purchase, in open market transactions, an additional approximately
877,000 shares of its common stock.

 52


Information regarding the Company’s
common stock is as follows (amounts in thousands):
 


 
  
January 31, 

 
  
2024  
2023 

 
  
    
   

 
Authorized shares 
 45,000  
 45,000 

 
Issued shares 
 29,853  
 29,853 

 
Outstanding shares 
 17,504  
 17,390 

 

9.DERIVATIVE
                                            FINANCIAL INSTRUMENTS
 
The Company is exposed to various market risks,
including changes in commodity prices (raw materials and finished goods). To manage risks associated with the volatility of these
natural business exposures, the Company enters into commodity agreements (exchange-traded futures contracts and swaps) and forward
purchase (corn) and sale (ethanol, distillers grains and distillers corn oil) contracts. The Company does not purchase or sell
derivative financial instruments for trading or speculative purposes. The Company does not purchase or sell derivative financial
instruments for which a lack of marketplace quotations would require the use of fair value estimation techniques. The changes in
fair value of these derivative financial instruments are recognized in current period earnings as the Company does not use hedge
accounting.
 
The following table provides information about the
fair values of the Company’s derivative financial instruments and the line items on the Consolidated Balance Sheets in which
the fair values are reflected (in thousands):
 


 
  
Asset Derivatives
Fair Value at January 31,  
Liability Derivatives
Fair Value at January 31, 

 
  
2024  
2023  
2024  
2023 

 
  
    
    
    
   

 
Forward purchase contracts (1) 
$579  
$105  
$802  
$355 

 
  
    
    
    
   

 
Cash collateral balance (3) 
$2,152  
$1,735  
 -  
 - 

 
Commodity futures (2) 
 (297)  
 80  
 -  
 67 

 
Net position with broker 
$1,855  
$1,815  
 -  
 - 

 
  
    
    
    
   

 
Total 
$2,434  
$1,920  
$802  
$422 

 

(1)Forward purchase contracts assets are included in “Prepaid expenses and other” on the
accompanying Consolidated Balance Sheets. These contracts are for purchases of approximately 9.3 million and 5.2 million bushels
of corn at January 31, 2024 and 2023, respectively. Forward purchase contracts liabilities are included in “Accrued expenses
and other current liabilities” on the accompanying Consolidated Balance Sheets. These contracts are for purchases of approximately
8.2 million and 12.8 million bushels of corn at January 31, 2024 and 2023, respectively.
 

(2)Commodity futures assets are included in “Prepaid expenses and other” on the accompanying
Consolidated Balance Sheets. These contracts included short/sell positions and long/buy positions for approximately 255,000 and
6.9 million bushels of corn, respectively at January 31, 2024. These contracts also included short/sell positions for approximately
210,000 gallons of ethanol at 

 53


 
  January 31, 2024. These contracts included short/sell positions and long/buy positions for approximately
3.2 million and 725,000 bushels, respectively at January 31, 2023.

 
Commodity futures liabilities
are included in “Accrued expense and other current liabilities” on the accompanying Consolidated Balance Sheets. These
contracts included short/sell positions for approximately 1.4 million bushels at January 31, 2023.
 

(3)As of January 31, 2024, and 2023, all of the derivative financial instruments held by the Company
were subject to enforceable master netting arrangements. The Company’s accounting policy is to offset position amounts owed
or owing with the same counterparty. Depending on the amount of unrealized gains and losses on derivative contracts held by the
Company, the counterparty may require collateral to secure the Company’s derivative contract positions. As of January 31,
2024 and 2023, the Company was required to maintain collateral with the counterparty in the amount of approximately $2,152,000,
recorded within “Prepaid expenses and other” on the accompanying Consolidated Balance Sheets and $1,735,000, included
with “Restricted cash” on the accompanying Consolidated Balance Sheets, respectively.
 
See Note 4 which contains fair
value information related to derivative financial instruments.
 
The following table provides information about gains
(losses) recognized in income on the Company’s derivative financial instruments and the line items on the accompanying Consolidated
Statements of Operations in which the fair values are reflected for the years ended January 31, 2024, 2023 and 2022 (amounts in
thousands):
 


 
  
Year Ended January 31, 

 
  
2024  
2023  
2022 

 
  
    
    
   

 
Net sales 
$(37)  
$(1,024)  
$(12,109) 

 
  
    
    
   

 
Cost of sales 
$15,023  
$(12,714)  
$(3,427) 

 

10.EMPLOYEE
                                            BENEFITS
 
The Company maintains the REX
American Resources Corporation 2015 Incentive Plan, approved by its shareholders, which reserved a total of 1,650,000 shares of
common stock for issuance pursuant to its terms. The plan provides for the granting of shares of stock, including options to purchase
shares of common stock, stock appreciation rights tied to the value of common stock, restricted stock, and restricted stock unit
awards to eligible employees, non-employee directors and consultants. Until 2022, the Company had only granted restricted stock
awards.  In May 2022, the Company issued restricted stock units to certain officers of the Company which vest based on the
Company’s Total Shareholder Return (TSR) compared to the TSRs of companies that comprise the Russell 2000 Index over a three-year
performance period. The Company measures share-based compensation grants at fair value on the
grant date, adjusted for estimated forfeitures. The Company records noncash compensation expense related to equity awards in its
consolidated financial statements over the requisite service period on a straight-line basis. At January 31, 2024, 1,229,116 shares
remain available for issuance under the Plan, excluding the impact of the 67,500 restricted stock units that may vest between zero
and 135,000 shares of stock depending on certain performance metrics being achieved.

 54


Restricted Stock Awards
 
As a component of their compensation,
restricted stock has been granted to directors and certain employees at the market price of REX common stock on the date of the
grant. In addition, one-quarter (one-third prior to 2022) of executives’ incentive compensation is payable by an award of
restricted stock based on the then market price of REX common stock. The Company’s board of directors has determined that
the grant date will be June 15th, or the next business day, for all grants of restricted stock.
 
At January 31, 2024 and 2023,
unrecognized compensation cost related to nonvested restricted stock was approximately $453,000 and $450,000, related to shares
not considered vested for accounting purposes due to retirement eligibility. Based on retirement eligibility provisions, a portion
of restricted stock grants are expensed at grant date, based on grant date fair value. At January 31, 2024, 21,778 shares were
unvested for accounting purposes.
 
The following table summarizes
legally non-vested restricted stock award activity for fiscal years 2023, 2022, and 2021:
 


 
  
2023 

 
  
Non-Vested
Shares  
Weighted
Average Grant
Date Fair Value
(000’s)  
Weighted
Average Remaining
VestingTerm
(in years) 

 
  
    
    
   

 
Non-Vested at January 31, 2023 
 81,264  
$2,320  
 2 

 
Granted 
 113,726  
 3,945  
   

 
Forfeited 
 -  
 -  
   

 
Vested 
 32,135  
 896  
   

 
  
    
    
   

 
Non-Vested at January 31, 2024 
 162,855  
$5,369  
 2 

 


 
  
2022 

 
  
Non-Vested
Shares  
Weighted
Average Grant
Date Fair Value
(000’s)  
Weighted
Average Remaining
VestingTerm
(in years) 

 
  
    
    
   

 
Non-Vested at January 31, 2022 
 30,167  
$773  
 1 

 
Granted 
 70,689  
 2,032  
   

 
Forfeited 
 450  
 13  
   

 
Vested 
 19,142  
 472  
   

 
  
    
    
   

 
Non-Vested at January 31, 2023 
 81,264  
$2,320  
 2 


 55




 
  
2021 

 
  
Non-Vested
Shares  
Weighted
Average Grant
Date Fair Value
(000’s)  
Weighted
Average Remaining
Vesting Term
(in years) 

 
  
    
    
   

 
  
    
    
   

 
Non-Vested at January 31, 2021 
 59,102  
$1,398  
 1 

 
Granted 
 8,409  
 275  
   

 
Forfeited 
 -  
 -  
   

 
Vested 
 37,344  
 900  
   

 
  
    
    
   

 
Non-Vested at January 31, 2022 
 30,167  
$773  
 1 

 
Restricted Stock Units
(RSUs)
 
In May 2022, the Company issued
a total of 67,500 RSUs to certain officers. The number of RSUs eligible to vest will be determined based on how the Company’s
TSR compares to the TSR of companies that comprise the Russell 2000 Index during the three-year performance period ending December
31, 2024. The number of RSUs eligible to vest ranges from zero percent to two hundred percent, depending on actual performance
during the performance period. At grant date, the fair value of the RSUs was approximately $2.7 million based on a Monte-Carlo
simulation model.
 
For the years ended January
31, 2024 and 2023, the Company recognized compensation cost of approximately $1.1 million and $0.7 million, respectively, related
to RSUs. Unrecognized compensation cost related to nonvested RSUs was approximately $0.9 million and $2.0 million at January 31,
2024 and 2023, respectively.
 
The Company determined there
to be no dilutive impact on earnings per shares for January 31, 2023 and 2022. At January 31, 2024, we calculated the diluted weighted
average shares as follows (amounts in thousands):
 


 
Weighted average shares - basic 
 17,482 

 
Dilutive effect of RSUs 
 94 

 
Weighted average shares - diluted 
 17,576 

 



11.
COMMITMENTS

 
At January 31, 2024, One Earth
and NuGen had combined forward purchase contracts for approximately 17.4 million bushels of corn, the principal raw material
for their ethanol plants and they had combined forward purchase contracts for approximately 1.9 MmBtu of natural gas.
 
At January 31, 2024, One Earth
and NuGen had combined sales commitments for approximately 52.7 million gallons of ethanol, 120,000 tons of distillers grains
and 14.9 million pounds of distillers corn oil.
 
At January 31, 2024, One Earth
had signed contracts in place for capital projects of approximately $34.9 million, primarily related to its carbon capture and
sequestration project and plant expansion.

 56


One Earth has entered into
a 10-year agreement in 2009 with an unrelated party for the use of a portion of that party’s natural gas pipeline. A new
15-year agreement, with monthly payments of $29,250 was effective February 1, 2019. One Earth paid approximately $351,000 in fiscal
years 2023, 2022, and 2021 pursuant to the agreement.
 
One Earth and NuGen each have
a contract with an unrelated party (“Distillers Grains Marketers”) for distillers grains marketing services. Under
the terms of the contracts, the Distillers Grains Marketers will purchase all of One Earth’s and NuGen’s distillers grains
production during the term of the contracts. The contracts call for One Earth and NuGen to pay a fee per ton of distillers grains
sold for the Distillers Grains Marketers’ services. The terms of the agreements are for one year and renew automatically
for additional one-year terms, unless either party sends notice to the other party of its intent to terminate the agreement at
least 90 days prior to the expiration of the then current term of the agreement. One Earth and NuGen combined incurred fees of
approximately $1,199,000, $1,159,000, and $1,190,000 in fiscal years 2023, 2022, and 2021, respectively, for these marketing services.
 
The refined coal entity had
various agreements (site license, operating agreements, etc.) containing payment terms based upon production of refined coal under
which the Company was required to pay various fees. These fees totaled approximately $5,404,000 in fiscal year 2021.
 


12.
INCOME TAXES

 
The provision for income taxes
for fiscal years 2023, 2022, and 2021 consist of the following (amounts in thousands):
 


 
  
2023  
2022  
2021 

 
  
    
    
   

 
Federal: 
    
    
   

 
Current 
$4,580  
$4,485  
$4,450 

 
Deferred 
 14,102  
 2,925  
 12,064 

 
  
    
    
   

 
Total 
 18,682  
 7,410  
 16,514 

 
  
    
    
   

 
State and Local: 
    
    
   

 
Current 
 3,377  
 4,167  
 3,098 

 
Deferred 
 501  
 (2,035) 
 (581)

 
  
    
    
   

 
Total 
 3,878  
 2,132  
 2,517 

 
  
    
    
   

 
Provision for income taxes 
$22,560  
$9,542  
$19,031 


 57


The tax effects of significant
temporary differences representing deferred tax assets and liabilities are as follows (amounts in thousands):
 


 
  
January 31, 

 
  
2024  
2023 

 
Assets: 
    
   

 
General business credit carryforward 
$12,296  
$26,061 

 
Accrued liabilities 
 611  
 627 

 
State net operating loss carryforward 
 202  
 244 

 
Other items 
 288  
 240 

 
Valuation allowance 
 (160) 
 (192)

 
Total 
 13,237  
 26,980 

 
  
    
   

 
Liabilities: 
    
   

 
Basis in pass through entities, including depreciation 
 (6,334) 
 (5,821)

 
Other 
 (664) 
 (292)

 
Total 
 (6,998) 
 (6,113)

 
  
    
   

 
Net deferred tax asset 
$6,239  
$20,867 

 
The net deferred tax asset is reported on the accompanying Consolidated
Balance Sheets based on net position by tax jurisdiction, with federal positions recorded as net assets and state positions recorded as
net liabilities. At January 31, 2024 and 2023, respectively, approximately $7.8 million and $22.0 million are recorded as assets on the
Consolidated Balance Sheets within “Other assets” and $1.6 million and $1.1 million are recorded as liabilities on the accompanying
Consolidated Balance Sheets within “Deferred taxes”.
 
The Company has a general business
credit carryforward of approximately $12.3 million and $26.1 million at January 31, 2024 and 2023, respectively. The Company can
carry these credits forward for up to twenty years. The carryforward period begins to expire in fiscal year 2039.
 
The Company has a valuation allowance of approximately
$160,000 and $192,000 at January 31, 2024 and 2023, respectively, related to state net operating loss carryforwards. The Company
decreased the valuation allowance by $32,000 in fiscal year 2023. These adjustments to the valuation allowance are a result of
estimates of realizing certain future state tax benefits.
 
The Company assessed all available positive and
negative evidence to determine whether it expects sufficient future taxable income will be generated to allow for the realization
of existing federal deferred tax assets. There is sufficient objectively verifiable income for management to conclude that it is
more likely than not that the Company will utilize available federal deferred tax assets prior to their expiration.
 
Through its refined coal operation, the Company
earned production tax credits pursuant to IRC Section 45. The Company ceased operation of its refined coal business on November
18, 2021. The credits can be used to reduce future income tax liabilities for up to 20 years. These credits increased the income
tax benefit from discontinued operations by approximately $11.3 million during fiscal year 2021.
 
During fiscal years 2022 and
2021, the Company recognized an income tax benefit (provision) for federal and state research and experimentation credits (net
of uncertain tax position expense) of approximately $0.4 million and $(3.0) million, respectively. The credits can be used to reduce
future income tax liabilities for up to 20 years.
 
The Company paid income taxes
of approximately $12,730,000, $2,795,000, and $7,239,0000 in fiscal years 2023, 2022, and 2021, respectively. The Company did not
receive any refunds in fiscal years 2023, 2022 and 2021.

 58


Reconciliations of the federal
statutory tax and the Company’s income tax expense for fiscal years 2023, 2022, and 2021 are as follows (amounts in thousands):
 


 
  
2023  
2022  
2021 

 
  
   
   
  

 
Federal income tax at statutory rate 
$20,682  
$9,971  
$15,926 

 
State and local taxes, net of federal tax benefit 
 3,299  
 1,725  
 2,396 

 
Research and experimentation credits 
 -  
 (2,542) 
 (5,184)

 
Nondeductibe compensation expense 
 2,150  
 508  
 - 

 
Uncertain tax positions 
 (98) 
 2,281  
 8,340 

 
Noncontrolling interest 
 (3,650) 
 (2,523) 
 (2,231)

 
Other 
 177  
 122  
 (216)

 
  
    
    
   

 
Total 
$22,560  
$9,542  
$19,031 

 
The Company files a U.S. federal
income tax return and income tax returns in various states. In general, the Company is no longer subject to U.S. federal, state
or local income tax examinations by tax authorities for fiscal years ended January 31, 2014 and prior. The Company is currently
undergoing a federal income tax examination for the years ended January 31, 2015 through January 31, 2022 related to tax credits
claimed on returns during those years.
 
The Company applies the provisions
of ASC 740-10-25-5 for uncertain tax positions. As of January 31, 2024, total unrecognized tax benefits were approximately $18,895,000,
and accrued penalties and interest were approximately $70,000. If the Company were to prevail on all unrecognized tax benefits
recorded, the provision for income taxes would be reduced by approximately $18,812,000. In addition, the impact of penalties and
interest would also benefit the effective tax rate. Interest and penalties associated with unrecognized tax benefits are recorded
within income tax expense.
 
On a quarterly and annual basis,
the Company accrues for the effects of open uncertain tax positions and the related potential penalties and interest. It is reasonably
possible that the amount of the unrecognized tax benefit with respect to certain unrecognized tax positions will increase or decrease
during the next 12 months; however, the Company does not expect the change to have a material effect on results of operations or
financial position. The Company accounts for uncertainty in income taxes by determining whether it is more likely than not the position will be sustained on audit, including resolution of any related tax audits. A reconciliation of the beginning and ending amount of unrecognized tax benefits, including interest and penalties,
is as follows (amounts in thousands):
 


 
  
Fiscal Year 

 
  
2023  
2022 

 
  
    
   

 
Unrecognized tax benefits, beginning of year 
$19,088  
$16,781 

 
Changes for tax positions for prior years 
 45  
 165 

 
Changes for tax positions for current year 
 (168) 
 2,142 

 
  
    
   

 
Unrecognized tax benefits, end of year 
$18,965  
$19,088 

 
At January 31, 2024 and 2023, approximately $16.4 million of the unrecognized
tax benefits balance was recorded on the accompanying Consolidated Balance Sheets within “Other assets” and $0.6 million was
recorded within “Other long-term liabilities”. At January 31, 2024 and 2023, respectively, approximately $2.0 million and
$2.1 million of the unrecognized tax benefits balance was recorded on the accompanying Consolidated Balance Sheets within “Refundable
income taxes”.

 59



13.CONTINGENCIES
 
The Company is involved in
various legal actions arising in the normal course of business. After taking into consideration legal counsels’ evaluation
of such actions, management is of the opinion that their outcome will not have a material effect on the Company’s consolidated
financial statements. There were no liabilities recorded at January 31, 2024 as the Company did not believe that there was a probable
and reasonably estimable loss associated with any legal contingencies.
 


14.
DISCONTINUED OPERATIONS 

 
On November 18, 2021, the Company
ceased operation of its refined coal business as tax credits could no longer be earned on its operation. Beginning in the third
quarter of fiscal year 2021, the results of the operations of the refined coal business have been recognized as discontinued operations.
There were no amounts reclassified as discontinued operations in fiscal years 2023 and 2022.
 
Below is a table reflecting
certain items of the Consolidated Condensed Statement of Operations that were reclassified as discontinued operations for fiscal
year 2021 (amounts in thousands):
 


 
  
 2021 

 
  
   

 
Net sales and revenue1 
$400 

 
Cost of Sales 
 8,602 

 
Gross loss 
 (8,202) 

 
Selling, general and administrative 
 698 

 
Loss before income taxes 
 (8,900) 

 
Benefit for income taxes 
 13,295 

 
Net income from discontinued operations, net of tax 
 4,395 

 
Net loss attributable to noncontrolling interests2 
 397 

 
Net income attributable to REX common shareholders 
$4,792 

 
1 Refined coal sales were recorded net
of the cost of coal as the Company purchased the coal feedstock from the customer to which the processed refined coal was sold.
 
2 Net loss attributable to noncontrolling
interest represents the minority investor’s share of the loss before income taxes as noncontrolling interests does not include
any gain from the refined coal tax credits.
 
As of January 31, 2024 and
2023, there were no amounts on the balance sheet reclassified to discontinued operations.

 60




15.
RELATED PARTIES

 
During fiscal years 2023, 2022,
and 2021, One Earth and NuGen, combined, purchased approximately $117.0 million, $135.4 million, and $90.2 million, respectively,
of corn and other supplies from minority equity investors. The Company had amounts payable to related parties of approximately
$5.8 million, and $1.5 million at January 31, 2024 and 2023, respectively.
 
During fiscal year 2021, the
Company recognized commission expense of approximately $0.3 million, payable to the minority investor in the refined coal entity.
The commission expense is associated with the refined coal business, and as such, there was no commission expense recorded in fiscal
year 2023 or 2022.
 
During fiscal year 2023 and
2021, the Company received approximately $22,000 and $304,000 in capital contributions from the minority investor in the refined
coal entity. The Company did not receive capital contributions related to the refined coal entity in fiscal year 2022.
 
******

 61


Report of Independent Registered Public
Accounting Firm
 
To the Shareholders and the Board of Directors of REX American Resources
Corporation
 
Opinion on the Financial Statements
 
We have audited the accompanying consolidated balance sheet of REX
American Resources Corporation and subsidiaries (the Company) as of January 31, 2024, the related consolidated statements of operations,
equity and cash flows for the year then ended, and the related notes and schedule (collectively, the financial statements). In our opinion,
the financial statements present fairly, in all material respects, the financial position of the Company as of January 31, 2024, and the
results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the
United States of America.
 
We have also audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of January 31,
2024, based on criteria established in Internal Control — Integrated Framework issued by
the Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our report dated March 29, 2024 expressed an unqualified
opinion on the effectiveness of the Company's internal control over financial reporting.
 
Basis for Opinion
 
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting
firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
 
We conducted our audit in accordance with the standards of the PCAOB.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free
of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement
of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating
the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial
statements. We believe that our audit provides a reasonable basis for our opinion.
 
Critical Audit Matter
 
The critical audit matter communicated below is a matter arising
from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee
and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,
subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial
statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical
audit matter or on the accounts or disclosures to which it relates.

 62


Income Taxes
 
As discussed in notes 1 and 12,
the Company provides for deferred tax liabilities and assets for the future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards.
The Company provides for a valuation allowance if, based on the weight of available positive and negative evidence, it is more likely
than not that some or all of the deferred tax assets will not be realized. At January 31, 2024, the Company has a valuation allowance
of approximately $160,000. In addition, the Company accounts for uncertainty in income taxes by determining whether it is more likely
than not that the position will be sustained on audit, including resolution of any related tax audits. The Company has a general business
credit carryforward of approximately $12,300,000 (net of any uncertain tax positions) at January 31, 2024, which generally consist of
federal research and experimentation credits and federal refined coal credits. The Company has total unrecognized tax benefits of approximately
$18,895,000 at January 31, 2024. The Company also is currently undergoing a federal income tax examination for the years ended January
31, 2015 through January 31, 2022.
 
Due to the inherent uncertainty
in forecasting financial results, coupled with the specialized tax knowledge required to accurately predict future taxable income and
deductions, we identified management’s assertion that the federal deferred income tax assets are more likely than not to be realized
and valuation of the unrecognized tax benefit as critical audit matters. Performance of our audit procedures to evaluate management’s
judgments required a high degree of auditor judgment and the involvement of our tax specialists.
 
With the assistance of income
tax specialists, our audit procedures related to the evaluation of whether deferred tax assets are more likely than not realizable and
the valuation of uncertain tax benefits included the following, among others: 
 

●We obtained an understanding of the
relevant controls related to income taxes, including those over the evaluation of the valuation allowance and uncertain tax positions,
and we tested such controls for design and operating effectiveness.

●We evaluated the accuracy of management’s
schedule of future reversals of temporary differences by comparing to related schedules and expected reversal patterns and by evaluating
current tax laws.

●We tested the reasonableness of management’s
forecasted future income by comparing to normalized historical results.

●We tested the ability to carryforward
tax attributes, primarily general business credits and the timing of expiration.

●We evaluated management’s estimate
of the uncertain tax position by considering historical results of federal income tax examinations under similar circumstances.

 63



●We tested the mathematical accuracy
of the Company’s valuation allowance analysis and uncertain tax position analysis.

●We evaluated the sufficiency of the
Company’s disclosures related to the realizability of deferred income tax assets and the effects of uncertain tax positions in the
financial statements.
 
/s/ RSM US LLP  
 
We have served as the Company's auditor since 2023.
 
Des Moines, Iowa
March 29, 2024

 64


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
To the shareholders and the Board of Directors of REX American Resources
Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of REX
American Resources, Inc. and subsidiaries (the "Company") as of January 31, 2023, the related consolidated statements of statements
of operations, shareholders’ equity, and cash flows, for the years ended January 31, 2023 and 2022, and the related notes the schedule
listed in the Index at Item 15 (collectively referred to as the "financial statements"). In our opinion, the fiscal 2022 and
2021 financial statements present fairly, in all material respects, the financial position of the Company as of January 31, 2023, and
the results of its operations and its cash flows for the years ended January 31, 2023 and 2022, in conformity with accounting principles
generally accepted in the United States of America.
Change in Accounting Principle
As discussed in Note 1 to the financial statements, the accompanying
fiscal 2022 and 2021 financial statements have been retrospectively adjusted for a change in the method of accounting for shipping and handling
costs for products sold to customers from being recorded within “Selling, general and administrative expenses” to being recorded
within “Cost of sales” on the accompanying Consolidated Statements of Operations.
Basis for Opinion
These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We
are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with
the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the
PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material
misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation
of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
 
/s/ Deloitte & Touche LLP
 
Dayton, Ohio  
March 30, 2023 (March 29, 2024, as to the basis of presentation
described in Note 1)
 
We began serving as the Company’s auditor in 2002. In 2023
we became the predecessor auditor.
 

 65


REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES
 
Schedule II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED JANUARY 31, 2024, 2023 AND 2022
(Amounts in thousands)


 


  
Balance
Beginning
    of Year 
Additions
Charged to
    Cost and Expenses 
Deductions
Charges for
    Which Reserves Were Created 
Balance
End
    of Year

  
 
    
 
    
 
    
 
   

2024: 
 
    
 
    
 
    
 
   

Deferred tax valuation allowance 
    
$192    
    
$-     
       
$32        
   
$160   

  
 
    
 
    
 
    
 
   

2023: 
 
    
 
    
 
    
 
   

Deferred tax valuation allowance 
 
$213  
 
$-  
 
$21  
 
$192 

  
 
    
 
    
 
    
 
   

2022: 
 
    
 
    
 
    
 
   

Deferred tax valuation allowance 
 
$232  
 
$-  
 
$19  
 
$213 

 



Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

 
None.
 


Item 9A.
Controls and Procedures

 
Evaluation of Disclosure Controls and
Procedures
 
Our management evaluated, with the participation
of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures (as defined
in Rules 13a–15(e) and 15d–15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by
this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls
and procedures are effective at the reasonable assurance level to ensure that information required to be disclosed by us in the
reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within
the time periods specified in the Securities and Exchange Commission’s rules and forms. Our officers concluded that our disclosure
controls and procedures are also effective at the reasonable assurance level to ensure that information required to be disclosed
in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief
Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
 
Material Changes to Internal Control Over
Financial Reporting
 
There were no changes in
our internal control over financial reporting that occurred during our last fiscal quarter that have materially affected, or are
reasonably likely to materially affect, our internal control over financial reporting.

 66


Management’s Annual Report on
Internal Control Over Financial Reporting
 
Our management is responsible for establishing and maintaining adequate
internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f). Our internal control over financial reporting
is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
in accordance with accounting principles generally accepted in the United States of America.
 
All internal control systems, no matter how well designed, have
inherent limitations. Therefore, even those systems deemed to be effective can provide only reasonable assurance with respect to
financial statement preparation and presentation.
 
Under the supervision and with the participation of our senior management,
including our Chief Executive Officer and Chief Financial Officer, we assessed the effectiveness of our internal control over financial
reporting as of January 31, 2024 based on the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission (“COSO”). Based upon this assessment, our management concluded that our internal
control over financial reporting was effective as of January 31, 2024 based on those criteria.
 
The effectiveness of our internal control over financial reporting
as of January 31, 2024 has been audited by RSM US LLP, an independent registered public accounting firm, as stated in their report
which is included herein.
 


 
/s/ ZAFAR A. RIZVI
 
Chief Executive Officer and President
 
 

 
Zafar A. Rizvi
 
(principal executive officer)
 
March 29, 2024

 
 
 
 
 
 

 
/s/ DOUGLAS L. BRUGGEMAN
 
Vice President-Finance, Chief Financial Officer and Treasurer

 
Douglas L. Bruggeman
 
(principal financial and accounting officer)
 
March 29, 2024


 67


Report of Independent Registered
Public Accounting Firm
 
To the Shareholders and the Board of Directors of REX American
Resources Corporation
 
Opinion on the Internal Control Over Financial Reporting
We have audited REX American Resources Corporation’s
(the Company) internal control over financial reporting as of January 31, 2024, based on criteria established in Internal Control
— Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. In our opinion,
the Company maintained, in all material respects, effective internal control over financial reporting as of January 31, 2024, based
on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of
the Treadway Commission in 2013.
 
We have also audited, in accordance with the standards of
the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements of the Company as
of January 31, 2024 and for the year then ended, and our report dated March 29, 2024 expressed an unqualified opinion.
 
Basis for Opinion
The Company’s management is responsible for maintaining
effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial
reporting in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility
is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting
firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
 
We conducted our audit in accordance with the standards of
the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal
control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures
as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
 
Definition and Limitations of Internal Control Over Financial
Reporting
A company’s internal control over financial reporting is
a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over
financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance
that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations
of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.
 
Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
 
/s/ RSM US LLP  
 
Des Moines, Iowa
March 29, 2024

 68





Item 9B.
Other Information

 
None.
 


Item 9C.
Disclosure Regarding Foreign Jurisdictions
    that Prevent Inspections

 
Not applicable.
 
PART III
 


Item 10.
Directors, Executive Officers and Corporate Governance

 
The information required by this Item 10 is
incorporated herein by reference to the Proxy Statement for our Annual Meeting of Shareholders on June 11, 2024, except for certain
information concerning our executive officers which is set forth in Part I of this report.
 


Item 11.
Executive Compensation

 
The information required by this Item 11 is
set forth in the Proxy Statement for our Annual Meeting of Shareholders on June 11, 2024 and is incorporated herein by reference.
 


Item 12.
Security Ownership of Certain Beneficial
    Owners and Management and Related Stockholder Matters

 
The information required by this Item 12 is
set forth in the Proxy Statement for our Annual Meeting of Shareholders on June 11, 2024 and is incorporated herein by reference.
 


Item 13.
Certain Relationships and Related Transactions
    and Director Independence

 
The information required by this Item 13 is
set forth in the Proxy Statement for our Annual Meeting of Shareholders on June 11, 2024 and is incorporated herein by reference.
 


Item 14.
Principal Accountant Fees and Services

 
The information required by this Item 14 is set forth in the Proxy
Statement for our Annual Meeting of Shareholders on June 11, 2024 and is incorporated herein by reference.
 
PART IV
 


Item 15.
Exhibits and Financial Statement Schedules

 


 
(a)(1)  Financial Statements

 
The following consolidated financial statements
of REX American Resources Corporation and subsidiaries are filed as a part of this report at Item 8 hereof.
 
Consolidated Balance Sheets as of January 31,
2024 and 2023
 
Consolidated Statements of Operations for the
years ended January 31, 2024, 2023 and 2022
 
Consolidated Statements of Cash Flows for the
years ended January 31, 2024, 2023 and 2022
 
Consolidated Statements of Shareholders’
Equity for the years ended January 31, 2024, 2023 and 2022

 69


Notes to Consolidated Financial
Statements
 
Reports of Independent
Registered Public Accounting Firm-RSM US LLP (PCAOB ID No. 49)
 
Report of Independent Registered Public Accounting Firm-Deloitte & Touche LLP (PCOAB ID. 34)
 


 
(a)(2)(i)  Financial
Statement Schedules

 
The following financial
statement schedules are filed as a part of this report at Item 8 hereof.
 
Schedule II -Valuation and Qualifying Accounts
 
All other schedules are omitted because they
are not applicable or not required, or because the required information is included in the consolidated financial statements or
notes thereto.
 


 
(a)(3)  Exhibits

 
EXHIBIT INDEX
 


 
3(a)
Certificate of Incorporation, as amended (incorporated by reference to Exhibit 3(a) to Form
    10-Q for quarter ended July 31, 2010, File No. 001-09097)


 
 
 


 
3(b)
By-Laws, as amended (incorporated by reference to Exhibit 3(a) to Form 8-K filed June 8, 2015,
    File No. 001-09097)


 
 
 


 
4(a)
Description of Securities Registered Under Section 12 of the Exchange Act (incorporated by
    reference to Exhibit 4(a) to Form 10-K filed April 1, 2020, File No. 001-09097)


 
 
 


 
10(a)*
Employment Agreement dated May 24, 2022 between Rex Radio and Television, Inc. (a subsidiary
    of the Company) and Zafar A. Rizvi (incorporated by reference to Exhibit 10.1 to Form 8-K filed May 27, 2022, File No. 001-09097)


 
 
 

 
10(b)*
Employment Agreement dated May 24, 2022 between Rex Radio and Television, Inc. (a subsidiary
    of the Company) and Douglas L. Bruggeman (incorporated by reference to Exhibit 10.2 to Form 8-K filed May 27, 2022, File No.
    001-09097)


 
 
 

 
10(c)*
Employment Agreement dated May 24, 2022 between Rex Radio and Television, Inc. (a subsidiary
    of the Company) and Stuart A. Rose (incorporated by reference to Exhibit 10.3 to Form 8-K filed May 27, 2022, File No. 001-09097)


 
 
 


 
10(d)*
2015 Incentive Plan (incorporated by reference to Exhibit 10(d) to Form 8-K filed June 8,
    2015, File No. 001-09097)


 
 
 


 
10(e)*
Form of Restricted Stock Award Agreement under the REX American Resources 2015 Incentive Plan
    (incorporated by reference to Exhibit 10.1 to Form 8-K filed June 22, 2022, File No. 001-09097)



 70




 
10(f)*
Form of REX American Resources Corporation Restricted Stock Unit Award Agreement
    (Employee-Performance Based Vesting Award) (incorporated by reference to Exhibit 10.4 to Form 8-K filed May 27, 2022, File
    No. 001-09097)


 


(21)
Subsidiaries of the registrant:


 
 
 


 
21
Subsidiaries of registrant


 
 
 


(23)
Consents of experts and counsel:


 
 
 


 
23(a)
Consent of RSM US LLP, Independent Registered Public Accounting Firm


 
 
 

 
23(b)
Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm


 
 
 

(31)
Rule 13a-14(a)/15d-14(a) Certifications:


 
 
 


 
31
Certifications


 
 
 


(32)
Section 1350 Certifications:



 
 
 

 
32
Certifications


 
 
 


(97)
Policy relating to erroneously awarded compensation:


 
 
 


 
97.1
REX American Resources Corporation Compensation Recovery Policy


 
 
 


(101)
Interactive Data File:


 
 
 


 
101
The following information from REX American Resources Corporation Annual Report on Form 10-K for the fiscal year ended
    January 31, 2024, formatted in iXBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated
    Statements of Shareholders’ Equity, (iv) Consolidated Statements of Cash Flows and (v) Notes to Consolidated Financial
    Statements.


 
 
 


 
104
The cover page from REX American Resources Corporation on Form 10-K for the year ended January 31, 2024


 
 
 

 
 
Copies of the Exhibits not filed herewith may be obtained by writing to Edward M. Kress,
    Secretary, REX American Resources Corporation, 7720 Paragon Road, Dayton, Ohio 45459.


 
Those exhibits marked with an asterisk (*)
above are management contracts or compensatory plans or arrangements for directors or executive officers of the registrant.
 


Item 16.
Form 10-K Summary

 
None.

 71


SIGNATURES
 
Pursuant to the requirements of Section 13
or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
 


 
REX AMERICAN RESOURCES CORPORATION

 
 

 
By:  /s/ ZAFAR A. RIZVI

 
Zafar A. Rizvi

 
Chief Executive Officer and President

 
Date: March 29, 2024
 
Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.
 


Signature
Capacity
Date

 
 
 

/s/ STUART A. ROSE
    Stuart A. Rose
Executive Chairman of the Board
March 29, 2024

 
 
 

/s/ ZAFAR A. RIZVI
    Zafar A. Rizvi
Chief Executive Officer, President and Director (principal executive officer)
March 29, 2024

 
 
 

/s/ DOUGLAS L. BRUGGEMAN
    Douglas L. Bruggeman
Vice President-Finance, Chief Financial Officer and Treasurer (principal financial and accounting officer)
March 29, 2024

 
 
 

/s/ EDWARD M. KRESS
    Edward M. Kress
Director
March 29, 2024

 
 
 

/s/ CHARLES A. ELCAN
    Charles A. Elcan
Director
March 29, 2024

 
 
 

/s/ DAVID S. HARRIS
    David S. Harris
Director
March 29, 2024

 
 
 

/s/ MERVYN L. ALPHONSO
    Mervyn L. Alphonso
Director
March 29, 2024

 
 
 

/s/ LEE I. FISHER
    Lee I. Fisher
Director
March 29, 2024

 
 
 

/s/ ANNE C. MACMILLAN
    Anne C. MacMillan
Director
March 29, 2024

 
 
 

/s/ CHERYL L. BUSTOS
    Cheryl L. Bustos
Director
March 29, 2024


 72



2024















































Forward purchase contracts assets are included in “Prepaid expenses and other” on the accompanying Consolidated Balance Sheets. These contracts are for purchases of approximately 9.3 million and 5.2 million bushels of corn at January 31, 2024 and 2023, respectively. Forward purchase contracts liabilities are included in “Accrued expenses and other current liabilities” on the accompanying Consolidated Balance Sheets. These contracts are for purchases of approximately 8.2 million and 12.8 million bushels of corn at January 31, 2024 and 2023, respectively.
Commodity futures assets are included in “Prepaid expenses and other” on the accompanying Consolidated Balance Sheets. These contracts included short/sell positions and long/buy positions for approximately 255,000 and 6.9 million bushels of corn, respectively at January 31, 2024. These contracts also included short/sell positions for approximately 210,000 gallons of ethanol at January 31, 2024. These contracts included short/sell positions and long/buy positions for approximately 3.2 million and 725,000 bushels, respectively at January 31, 2023.
As of January 31, 2024, and 2023, all of the derivative financial instruments held by the Company were subject to enforceable master netting arrangements. The Company’s accounting policy is to offset position amounts owed or owing with the same counterparty. Depending on the amount of unrealized gains and losses on derivative contracts held by the Company, the counterparty may require collateral to secure the Company’s derivative contract positions. As of January 31, 2024 and 2023, the Company was required to maintain collateral with the counterparty in the amount of approximately $2,152,000, recorded within “Prepaid expenses and other” on the accompanying Consolidated Balance Sheets and $1,735,000, included with “Restricted cash” on the accompanying Consolidated Balance Sheets, respectively.






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